Correlation Between HDFC Bank and Marsh McLennan

Can any of the company-specific risk be diversified away by investing in both HDFC Bank 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 HDFC Bank and Marsh McLennan into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between HDFC Bank Limited and Marsh McLennan Companies, you can compare the effects of market volatilities on HDFC Bank 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 HDFC Bank with a short position of Marsh McLennan. Check out your portfolio center. Please also check ongoing floating volatility patterns of HDFC Bank and Marsh McLennan.

Diversification Opportunities for HDFC Bank and Marsh McLennan

-0.69

Correlation Coefficient

HDFC Bank  Marsh McLennan

Excellent diversification

The 3 months correlation between HDFC and Marsh is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding HDFC Bank Limited 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 HDFC Bank 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 HDFC Bank Limited 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 HDFC Bank i.e., HDFC Bank and Marsh McLennan go up and down completely randomly.

Pair Corralation between HDFC Bank and Marsh McLennan

Considering the 90-day investment horizon HDFC Bank Limited is expected to generate 0.75 times more return on investment than Marsh McLennan. However, HDFC Bank Limited is 1.34 times less risky than Marsh McLennan. It trades about 0.01 of its potential returns per unit of risk. Marsh McLennan Companies is currently generating about -0.14 per unit of risk. If you would invest  3,634  in HDFC Bank Limited on August 26, 2025 and sell it today you would earn a total of  4.00  from holding HDFC Bank Limited or generate 0.11% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

HDFC Bank Limited  vs.  Marsh McLennan Companies

HDFC Bank Limited

Risk-Adjusted Performance

Weakest

Over the last 90 days HDFC Bank Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong fundamental indicators, HDFC Bank is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Marsh McLennan Companies

Risk-Adjusted Performance

Weakest

Over the last 90 days Marsh McLennan Companies has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's primary indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Pair Trading with HDFC Bank and Marsh McLennan

The main advantage of trading using opposite HDFC Bank and Marsh McLennan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HDFC Bank 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.

The idea behind HDFC Bank Limited and Marsh McLennan Companies pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.