Correlation Between GBS Software and Marsh McLennan
Can any of the company-specific risk be diversified away by investing in both GBS Software and Marsh McLennan 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 GBS Software and Marsh McLennan into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between GBS Software AG and Marsh McLennan Companies, you can compare the effects of market volatilities on GBS Software and Marsh McLennan 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 GBS Software with a short position of Marsh McLennan. Check out your portfolio center. Please also check ongoing floating volatility patterns of GBS Software and Marsh McLennan.
Diversification Opportunities for GBS Software and Marsh McLennan
0.08 | Correlation Coefficient |
Significant diversification
The 3 months correlation between GBS and Marsh is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding GBS Software AG and Marsh McLennan Companies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Marsh McLennan Companies and GBS Software 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 GBS Software AG are associated (or correlated) with Marsh McLennan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Marsh McLennan Companies has no effect on the direction of GBS Software i.e., GBS Software and Marsh McLennan go up and down completely randomly.
Pair Corralation between GBS Software and Marsh McLennan
Assuming the 90 days trading horizon GBS Software AG is expected to generate 2.39 times more return on investment than Marsh McLennan. However, GBS Software is 2.39 times more volatile than Marsh McLennan Companies. It trades about 0.23 of its potential returns per unit of risk. Marsh McLennan Companies is currently generating about 0.15 per unit of risk. If you would invest 276.00 in GBS Software AG on October 29, 2024 and sell it today you would earn a total of 28.00 from holding GBS Software AG or generate 10.14% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
GBS Software AG vs. Marsh McLennan Companies
Performance |
| Timeline |
| GBS Software AG |
| Marsh McLennan Companies |
GBS Software and Marsh McLennan Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GBS Software and Marsh McLennan
The main advantage of trading using opposite GBS Software and Marsh McLennan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GBS Software position performs unexpectedly, Marsh McLennan 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 Marsh McLennan will offset losses from the drop in Marsh McLennan's long position.| GBS Software vs. Addus HomeCare | GBS Software vs. Sunny Optical Technology | GBS Software vs. Cognizant Technology Solutions | GBS Software vs. Check Point Software |
| Marsh McLennan vs. Axway Software SA | Marsh McLennan vs. GBS Software AG | Marsh McLennan vs. China BlueChemical | Marsh McLennan vs. PTT Global Chemical |
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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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