Correlation Between Regional Management and Willis Towers
Can any of the company-specific risk be diversified away by investing in both Regional Management and Willis Towers 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 Regional Management and Willis Towers into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Regional Management Corp and Willis Towers Watson, you can compare the effects of market volatilities on Regional Management and Willis Towers 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 Regional Management with a short position of Willis Towers. Check out your portfolio center. Please also check ongoing floating volatility patterns of Regional Management and Willis Towers.
Diversification Opportunities for Regional Management and Willis Towers
-0.36 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Regional and Willis is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Regional Management Corp and Willis Towers Watson in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Willis Towers Watson and Regional Management 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 Regional Management Corp are associated (or correlated) with Willis Towers. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Willis Towers Watson has no effect on the direction of Regional Management i.e., Regional Management and Willis Towers go up and down completely randomly.
Pair Corralation between Regional Management and Willis Towers
Allowing for the 90-day total investment horizon Regional Management is expected to generate 1.1 times less return on investment than Willis Towers. In addition to that, Regional Management is 2.53 times more volatile than Willis Towers Watson. It trades about 0.12 of its total potential returns per unit of risk. Willis Towers Watson is currently generating about 0.35 per unit of volatility. If you would invest 29,354 in Willis Towers Watson on August 31, 2024 and sell it today you would earn a total of 2,732 from holding Willis Towers Watson or generate 9.31% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Regional Management Corp vs. Willis Towers Watson
Performance |
| Timeline |
| Regional Management Corp |
| Willis Towers Watson |
Regional Management and Willis Towers Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Regional Management and Willis Towers
The main advantage of trading using opposite Regional Management and Willis Towers positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Regional Management position performs unexpectedly, Willis Towers 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 Willis Towers will offset losses from the drop in Willis Towers' long position.| Regional Management vs. SLM Corp Pb | Regional Management vs. FirstCash | Regional Management vs. Navient Corp | Regional Management vs. Orix Corp Ads |
| Willis Towers vs. Marsh McLennan Companies | Willis Towers vs. Arthur J Gallagher | Willis Towers vs. Brown Brown | Willis Towers 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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