Correlation Between Willis Towers and Samsung Electronics
Can any of the company-specific risk be diversified away by investing in both Willis Towers and Samsung Electronics 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 Samsung Electronics 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 Samsung Electronics Co, you can compare the effects of market volatilities on Willis Towers and Samsung Electronics 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 Samsung Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Willis Towers and Samsung Electronics.
Diversification Opportunities for Willis Towers and Samsung Electronics
-0.34 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Willis and Samsung is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding Willis Towers Watson and Samsung Electronics Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Samsung Electronics 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 Samsung Electronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Samsung Electronics has no effect on the direction of Willis Towers i.e., Willis Towers and Samsung Electronics go up and down completely randomly.
Pair Corralation between Willis Towers and Samsung Electronics
Assuming the 90 days horizon Willis Towers Watson is expected to generate 0.48 times more return on investment than Samsung Electronics. However, Willis Towers Watson is 2.09 times less risky than Samsung Electronics. It trades about 0.02 of its potential returns per unit of risk. Samsung Electronics Co is currently generating about -0.03 per unit of risk. If you would invest 30,311 in Willis Towers Watson on October 28, 2024 and sell it today you would earn a total of 89.00 from holding Willis Towers Watson or generate 0.29% 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. Samsung Electronics Co
Performance |
| Timeline |
| Willis Towers Watson |
| Samsung Electronics |
Willis Towers and Samsung Electronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Willis Towers and Samsung Electronics
The main advantage of trading using opposite Willis Towers and Samsung Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Willis Towers position performs unexpectedly, Samsung Electronics 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 Samsung Electronics will offset losses from the drop in Samsung Electronics' long position.| Willis Towers vs. United Natural Foods | Willis Towers vs. AAC TECHNOLOGHLDGADR | Willis Towers vs. Addtech AB | Willis Towers vs. Nomad Foods |
| Samsung Electronics vs. Samsung Electronics Co | Samsung Electronics vs. Microsoft | Samsung Electronics vs. Tencent Holdings |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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