Correlation Between Marsh McLennan and Huize Holding
Can any of the company-specific risk be diversified away by investing in both Marsh McLennan and Huize Holding 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 Huize Holding 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 Huize Holding, you can compare the effects of market volatilities on Marsh McLennan and Huize Holding 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 Huize Holding. Check out your portfolio center. Please also check ongoing floating volatility patterns of Marsh McLennan and Huize Holding.
Diversification Opportunities for Marsh McLennan and Huize Holding
-0.39 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Marsh and Huize is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Marsh McLennan Companies and Huize Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Huize Holding 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 Huize Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Huize Holding has no effect on the direction of Marsh McLennan i.e., Marsh McLennan and Huize Holding go up and down completely randomly.
Pair Corralation between Marsh McLennan and Huize Holding
Considering the 90-day investment horizon Marsh McLennan Companies is expected to generate 0.16 times more return on investment than Huize Holding. However, Marsh McLennan Companies is 6.3 times less risky than Huize Holding. It trades about 0.29 of its potential returns per unit of risk. Huize Holding is currently generating about -0.15 per unit of risk. If you would invest 22,102 in Marsh McLennan Companies on August 31, 2024 and sell it today you would earn a total of 1,222 from holding Marsh McLennan Companies or generate 5.53% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Marsh McLennan Companies vs. Huize Holding
Performance |
| Timeline |
| Marsh McLennan Companies |
| Huize Holding |
Marsh McLennan and Huize Holding Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Marsh McLennan and Huize Holding
The main advantage of trading using opposite Marsh McLennan and Huize Holding positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Marsh McLennan position performs unexpectedly, Huize Holding 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 Huize Holding will offset losses from the drop in Huize Holding'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 |
| Huize Holding vs. CorVel Corp | Huize Holding vs. Erie Indemnity | Huize Holding vs. Crawford Company | Huize Holding 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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