Correlation Between Carlyle and Willis Towers
Can any of the company-specific risk be diversified away by investing in both Carlyle 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 Carlyle and Willis Towers into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Carlyle Group and Willis Towers Watson, you can compare the effects of market volatilities on Carlyle 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 Carlyle with a short position of Willis Towers. Check out your portfolio center. Please also check ongoing floating volatility patterns of Carlyle and Willis Towers.
Diversification Opportunities for Carlyle and Willis Towers
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Carlyle and Willis is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Carlyle Group 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 Carlyle 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 Carlyle Group 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 Carlyle i.e., Carlyle and Willis Towers go up and down completely randomly.
Pair Corralation between Carlyle and Willis Towers
Allowing for the 90-day total investment horizon Carlyle is expected to generate 2.02 times less return on investment than Willis Towers. In addition to that, Carlyle is 2.23 times more volatile than Willis Towers Watson. It trades about 0.08 of its total potential returns per unit of risk. Willis Towers Watson is currently generating about 0.35 per unit of volatility. If you would invest 29,354 in Willis Towers Watson on August 31, 2024 and sell it today you would earn a total of 2,732 from holding Willis Towers Watson or generate 9.31% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Carlyle Group vs. Willis Towers Watson
Performance |
| Timeline |
| Carlyle Group |
| Willis Towers Watson |
Carlyle and Willis Towers Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Carlyle and Willis Towers
The main advantage of trading using opposite Carlyle and Willis Towers positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Carlyle 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.| Carlyle vs. Apollo Global Management | Carlyle vs. Blackstone Group | Carlyle vs. Brookfield Asset Management | Carlyle vs. Ares Management LP |
| 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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