Correlation Between Marsh McLennan and BCE
Can any of the company-specific risk be diversified away by investing in both Marsh McLennan and BCE 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 Marsh McLennan and BCE into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Marsh McLennan Companies and BCE Inc, you can compare the effects of market volatilities on Marsh McLennan and BCE 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 Marsh McLennan with a short position of BCE. Check out your portfolio center. Please also check ongoing floating volatility patterns of Marsh McLennan and BCE.
Diversification Opportunities for Marsh McLennan and BCE
0.03 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Marsh and BCE is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding Marsh McLennan Companies and BCE Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BCE Inc and Marsh McLennan 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 Marsh McLennan Companies are associated (or correlated) with BCE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BCE Inc has no effect on the direction of Marsh McLennan i.e., Marsh McLennan and BCE go up and down completely randomly.
Pair Corralation between Marsh McLennan and BCE
Considering the 90-day investment horizon Marsh McLennan Companies is expected to generate 2.28 times more return on investment than BCE. However, Marsh McLennan is 2.28 times more volatile than BCE Inc. It trades about 0.13 of its potential returns per unit of risk. BCE Inc is currently generating about 0.13 per unit of risk. If you would invest 20,498 in Marsh McLennan Companies on September 1, 2024 and sell it today you would earn a total of 2,825 from holding Marsh McLennan Companies or generate 13.78% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Marsh McLennan Companies vs. BCE Inc
Performance |
| Timeline |
| Marsh McLennan Companies |
| BCE Inc |
Marsh McLennan and BCE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Marsh McLennan and BCE
The main advantage of trading using opposite Marsh McLennan and BCE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Marsh McLennan position performs unexpectedly, BCE 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 BCE will offset losses from the drop in BCE's long position.| Marsh McLennan vs. Arthur J Gallagher | Marsh McLennan vs. Willis Towers Watson | Marsh McLennan vs. Brown Brown | Marsh McLennan 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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