Correlation Between Willis Towers and Arthur J
Can any of the company-specific risk be diversified away by investing in both Willis Towers and Arthur J 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 Willis Towers and Arthur J into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Willis Towers Watson and Arthur J Gallagher, you can compare the effects of market volatilities on Willis Towers and Arthur J 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 Willis Towers with a short position of Arthur J. Check out your portfolio center. Please also check ongoing floating volatility patterns of Willis Towers and Arthur J.
Diversification Opportunities for Willis Towers and Arthur J
0.37 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Willis and Arthur is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Willis Towers Watson and Arthur J Gallagher in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Arthur J Gallagher and Willis Towers 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 Willis Towers Watson are associated (or correlated) with Arthur J. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Arthur J Gallagher has no effect on the direction of Willis Towers i.e., Willis Towers and Arthur J go up and down completely randomly.
Pair Corralation between Willis Towers and Arthur J
Considering the 90-day investment horizon Willis Towers Watson is expected to generate 1.19 times more return on investment than Arthur J. However, Willis Towers is 1.19 times more volatile than Arthur J Gallagher. It trades about 0.3 of its potential returns per unit of risk. Arthur J Gallagher is currently generating about 0.33 per unit of risk. If you would invest 29,212 in Willis Towers Watson on August 28, 2024 and sell it today you would earn a total of 2,251 from holding Willis Towers Watson or generate 7.71% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Willis Towers Watson vs. Arthur J Gallagher
Performance |
| Timeline |
| Willis Towers Watson |
| Arthur J Gallagher |
Willis Towers and Arthur J Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Willis Towers and Arthur J
The main advantage of trading using opposite Willis Towers and Arthur J positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Willis Towers position performs unexpectedly, Arthur J 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 Arthur J will offset losses from the drop in Arthur J's long position.| Willis Towers vs. Marsh McLennan Companies | Willis Towers vs. Arthur J Gallagher | Willis Towers vs. Brown Brown | Willis Towers vs. Erie Indemnity |
| Arthur J vs. GoHealth | Arthur J vs. Tian Ruixiang Holdings | Arthur J vs. Huize Holding | Arthur J vs. CorVel Corp |
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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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