Correlation Between Willis Towers and Baldwin Insurance
Can any of the company-specific risk be diversified away by investing in both Willis Towers and Baldwin Insurance 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 Baldwin Insurance 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 The Baldwin Insurance, you can compare the effects of market volatilities on Willis Towers and Baldwin Insurance 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 Baldwin Insurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Willis Towers and Baldwin Insurance.
Diversification Opportunities for Willis Towers and Baldwin Insurance
-0.38 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Willis and Baldwin is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding Willis Towers Watson and The Baldwin Insurance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Baldwin Insurance 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 Baldwin Insurance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Baldwin Insurance has no effect on the direction of Willis Towers i.e., Willis Towers and Baldwin Insurance go up and down completely randomly.
Pair Corralation between Willis Towers and Baldwin Insurance
Considering the 90-day investment horizon Willis Towers is expected to generate 2.06 times less return on investment than Baldwin Insurance. But when comparing it to its historical volatility, Willis Towers Watson is 2.02 times less risky than Baldwin Insurance. It trades about 0.05 of its potential returns per unit of risk. The Baldwin Insurance is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 2,901 in The Baldwin Insurance on August 24, 2024 and sell it today you would earn a total of 1,776 from holding The Baldwin Insurance or generate 61.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Willis Towers Watson vs. The Baldwin Insurance
Performance |
| Timeline |
| Willis Towers Watson |
| Baldwin Insurance |
Willis Towers and Baldwin Insurance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Willis Towers and Baldwin Insurance
The main advantage of trading using opposite Willis Towers and Baldwin Insurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Willis Towers position performs unexpectedly, Baldwin Insurance 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 Baldwin Insurance will offset losses from the drop in Baldwin Insurance's long position.| Willis Towers vs. Arthur J Gallagher | Willis Towers vs. Brown Brown | Willis Towers vs. Aon PLC | Willis Towers vs. CorVel Corp |
| Baldwin Insurance vs. Nok Airlines Public | Baldwin Insurance vs. Volaris | Baldwin Insurance vs. Air Transport Services | Baldwin Insurance vs. Paysafe |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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