Correlation Between Marsh McLennan and CRAWFORD +
Can any of the company-specific risk be diversified away by investing in both Marsh McLennan and CRAWFORD + 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 CRAWFORD + 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 CRAWFORD A NV, you can compare the effects of market volatilities on Marsh McLennan and CRAWFORD + 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 CRAWFORD +. Check out your portfolio center. Please also check ongoing floating volatility patterns of Marsh McLennan and CRAWFORD +.
Diversification Opportunities for Marsh McLennan and CRAWFORD +
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Marsh and CRAWFORD is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Marsh McLennan Companies and CRAWFORD A NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CRAWFORD A NV 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 CRAWFORD +. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CRAWFORD A NV has no effect on the direction of Marsh McLennan i.e., Marsh McLennan and CRAWFORD + go up and down completely randomly.
Pair Corralation between Marsh McLennan and CRAWFORD +
Assuming the 90 days horizon Marsh McLennan Companies is expected to under-perform the CRAWFORD +. But the stock apears to be less risky and, when comparing its historical volatility, Marsh McLennan Companies is 2.99 times less risky than CRAWFORD +. The stock trades about -0.07 of its potential returns per unit of risk. The CRAWFORD A NV is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest 1,050 in CRAWFORD A NV on October 11, 2024 and sell it today you would lose (10.00) from holding CRAWFORD A NV or give up 0.95% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Marsh McLennan Companies vs. CRAWFORD A NV
Performance |
| Timeline |
| Marsh McLennan Companies |
| CRAWFORD A NV |
Marsh McLennan and CRAWFORD + Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Marsh McLennan and CRAWFORD +
The main advantage of trading using opposite Marsh McLennan and CRAWFORD + positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Marsh McLennan position performs unexpectedly, CRAWFORD + 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 CRAWFORD + will offset losses from the drop in CRAWFORD +'s long position.| Marsh McLennan vs. NH HOTEL GROUP | Marsh McLennan vs. The Hongkong and | Marsh McLennan vs. Thai Beverage Public | Marsh McLennan vs. TYSON FOODS A |
| CRAWFORD + vs. Forsys Metals Corp | CRAWFORD + vs. Aluminum of | CRAWFORD + vs. GALENA MINING LTD | CRAWFORD + vs. SERI INDUSTRIAL EO |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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