Correlation Between Citigroup and Willis Towers
Can any of the company-specific risk be diversified away by investing in both Citigroup and Willis Towers at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Citigroup and Willis Towers into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citigroup and Willis Towers Watson, you can compare the effects of market volatilities on Citigroup and Willis Towers and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Citigroup with a short position of Willis Towers. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and Willis Towers.
Diversification Opportunities for Citigroup and Willis Towers
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Citigroup and Willis is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Willis Towers Watson in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Willis Towers Watson and Citigroup is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Citigroup are associated (or correlated) with Willis Towers. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Willis Towers Watson has no effect on the direction of Citigroup i.e., Citigroup and Willis Towers go up and down completely randomly.
Pair Corralation between Citigroup and Willis Towers
Taking into account the 90-day investment horizon Citigroup is expected to generate 1.74 times more return on investment than Willis Towers. However, Citigroup is 1.74 times more volatile than Willis Towers Watson. It trades about 0.21 of its potential returns per unit of risk. Willis Towers Watson is currently generating about 0.35 per unit of risk. If you would invest 6,393 in Citigroup on August 31, 2024 and sell it today you would earn a total of 623.00 from holding Citigroup or generate 9.75% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Citigroup vs. Willis Towers Watson
Performance |
| Timeline |
| Citigroup |
| Willis Towers Watson |
Citigroup and Willis Towers Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Citigroup and Willis Towers
The main advantage of trading using opposite Citigroup and Willis Towers positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup position performs unexpectedly, Willis Towers can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Willis Towers will offset losses from the drop in Willis Towers' long position.| Citigroup vs. JPMorgan Chase Co | Citigroup vs. Wells Fargo | Citigroup vs. Toronto Dominion Bank | Citigroup vs. Nu Holdings |
| Willis Towers vs. Marsh McLennan Companies | Willis Towers vs. Arthur J Gallagher | Willis Towers vs. Brown Brown | Willis Towers vs. Erie Indemnity |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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