Correlation Between Selectquote and Willis Towers
Can any of the company-specific risk be diversified away by investing in both Selectquote and Willis Towers 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 Selectquote and Willis Towers into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Selectquote and Willis Towers Watson, you can compare the effects of market volatilities on Selectquote and Willis Towers 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 Selectquote with a short position of Willis Towers. Check out your portfolio center. Please also check ongoing floating volatility patterns of Selectquote and Willis Towers.
Diversification Opportunities for Selectquote and Willis Towers
0.53 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Selectquote and Willis is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Selectquote and Willis Towers Watson in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Willis Towers Watson and Selectquote 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 Selectquote are associated (or correlated) with Willis Towers. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Willis Towers Watson has no effect on the direction of Selectquote i.e., Selectquote and Willis Towers go up and down completely randomly.
Pair Corralation between Selectquote and Willis Towers
Given the investment horizon of 90 days Selectquote is expected to generate 3.89 times more return on investment than Willis Towers. However, Selectquote is 3.89 times more volatile than Willis Towers Watson. It trades about -0.03 of its potential returns per unit of risk. Willis Towers Watson is currently generating about -0.25 per unit of risk. If you would invest 189.00 in Selectquote on February 3, 2024 and sell it today you would lose (9.00) from holding Selectquote or give up 4.76% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Selectquote vs. Willis Towers Watson
Performance |
Timeline |
Selectquote |
Willis Towers Watson |
Selectquote and Willis Towers Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Selectquote and Willis Towers
The main advantage of trading using opposite Selectquote and Willis Towers positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Selectquote position performs unexpectedly, Willis Towers 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 Willis Towers will offset losses from the drop in Willis Towers' long position.Selectquote vs. eHealth | Selectquote vs. Fanhua Inc | Selectquote vs. CorVel Corp | Selectquote vs. Brown Brown |
Willis Towers vs. Marsh McLennan Companies | Willis Towers vs. Arthur J Gallagher | Willis Towers vs. Brown Brown | Willis Towers 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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