Correlation Between Willis Towers and Marsh McLennan
Can any of the company-specific risk be diversified away by investing in both Willis Towers and Marsh McLennan 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 Marsh McLennan 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 Marsh McLennan Companies, you can compare the effects of market volatilities on Willis Towers and Marsh McLennan 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 Marsh McLennan. Check out your portfolio center. Please also check ongoing floating volatility patterns of Willis Towers and Marsh McLennan.
Diversification Opportunities for Willis Towers and Marsh McLennan
0.21 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Willis and Marsh is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Willis Towers Watson and Marsh McLennan Companies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Marsh McLennan Companies 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 Marsh McLennan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Marsh McLennan Companies has no effect on the direction of Willis Towers i.e., Willis Towers and Marsh McLennan go up and down completely randomly.
Pair Corralation between Willis Towers and Marsh McLennan
Considering the 90-day investment horizon Willis Towers Watson is expected to generate 1.12 times more return on investment than Marsh McLennan. However, Willis Towers is 1.12 times more volatile than Marsh McLennan Companies. It trades about 0.24 of its potential returns per unit of risk. Marsh McLennan Companies is currently generating about 0.2 per unit of risk. If you would invest 31,324 in Willis Towers Watson on November 1, 2024 and sell it today you would earn a total of 1,659 from holding Willis Towers Watson or generate 5.3% 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. Marsh McLennan Companies
Performance |
| Timeline |
| Willis Towers Watson |
| Marsh McLennan Companies |
Willis Towers and Marsh McLennan Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Willis Towers and Marsh McLennan
The main advantage of trading using opposite Willis Towers and Marsh McLennan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Willis Towers position performs unexpectedly, Marsh McLennan 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 Marsh McLennan will offset losses from the drop in Marsh McLennan'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 |
| Marsh McLennan vs. Arthur J Gallagher | Marsh McLennan vs. Willis Towers Watson | Marsh McLennan vs. Brown Brown | Marsh McLennan 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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