Correlation Between Marsh McLennan and CorVel Corp
Can any of the company-specific risk be diversified away by investing in both Marsh McLennan and CorVel Corp 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 CorVel Corp 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 CorVel Corp, you can compare the effects of market volatilities on Marsh McLennan and CorVel Corp 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 CorVel Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Marsh McLennan and CorVel Corp.
Diversification Opportunities for Marsh McLennan and CorVel Corp
0.05 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Marsh and CorVel is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Marsh McLennan Companies and CorVel Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CorVel Corp 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 CorVel Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CorVel Corp has no effect on the direction of Marsh McLennan i.e., Marsh McLennan and CorVel Corp go up and down completely randomly.
Pair Corralation between Marsh McLennan and CorVel Corp
Considering the 90-day investment horizon Marsh McLennan is expected to generate 2.76 times less return on investment than CorVel Corp. But when comparing it to its historical volatility, Marsh McLennan Companies is 2.12 times less risky than CorVel Corp. It trades about 0.08 of its potential returns per unit of risk. CorVel Corp is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 19,470 in CorVel Corp on August 28, 2024 and sell it today you would earn a total of 17,132 from holding CorVel Corp or generate 87.99% 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. CorVel Corp
Performance |
| Timeline |
| Marsh McLennan Companies |
| CorVel Corp |
Marsh McLennan and CorVel Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Marsh McLennan and CorVel Corp
The main advantage of trading using opposite Marsh McLennan and CorVel Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Marsh McLennan position performs unexpectedly, CorVel Corp 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 CorVel Corp will offset losses from the drop in CorVel Corp's long position.| Marsh McLennan vs. GoHealth | Marsh McLennan vs. Tian Ruixiang Holdings | Marsh McLennan vs. Huize Holding | Marsh McLennan vs. CorVel Corp |
| CorVel Corp vs. Erie Indemnity | CorVel Corp vs. Huize Holding | CorVel Corp vs. Crawford Company | CorVel Corp vs. eHealth |
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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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