Correlation Between Willis Towers and Fanhua
Can any of the company-specific risk be diversified away by investing in both Willis Towers and Fanhua 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 Fanhua 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 Fanhua Inc, you can compare the effects of market volatilities on Willis Towers and Fanhua 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 Fanhua. Check out your portfolio center. Please also check ongoing floating volatility patterns of Willis Towers and Fanhua.
Diversification Opportunities for Willis Towers and Fanhua
-0.74 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Willis and Fanhua is -0.74. Overlapping area represents the amount of risk that can be diversified away by holding Willis Towers Watson and Fanhua Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fanhua Inc 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 Fanhua. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fanhua Inc has no effect on the direction of Willis Towers i.e., Willis Towers and Fanhua go up and down completely randomly.
Pair Corralation between Willis Towers and Fanhua
Assuming the 90 days horizon Willis Towers Watson is expected to generate 0.15 times more return on investment than Fanhua. However, Willis Towers Watson is 6.7 times less risky than Fanhua. It trades about 0.27 of its potential returns per unit of risk. Fanhua Inc is currently generating about -0.37 per unit of risk. If you would invest 29,115 in Willis Towers Watson on October 12, 2024 and sell it today you would earn a total of 1,285 from holding Willis Towers Watson or generate 4.41% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Willis Towers Watson vs. Fanhua Inc
Performance |
| Timeline |
| Willis Towers Watson |
| Fanhua Inc |
Willis Towers and Fanhua Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Willis Towers and Fanhua
The main advantage of trading using opposite Willis Towers and Fanhua positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Willis Towers position performs unexpectedly, Fanhua 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 Fanhua will offset losses from the drop in Fanhua's long position.| Willis Towers vs. ZINC MEDIA GR | Willis Towers vs. Datadog | Willis Towers vs. SILVER BULLET DATA | Willis Towers vs. CNVISION MEDIA |
| Fanhua vs. Q2M Managementberatung AG | Fanhua vs. CeoTronics AG | Fanhua vs. Ares Management Corp | Fanhua vs. VITEC SOFTWARE GROUP |
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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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