Correlation Between Brp and Marsh McLennan

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

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

Diversification Opportunities for Brp and Marsh McLennan

0.05

Correlation Coefficient

Brp  Marsh McLennan

Significant diversification

The 3 months correlation between Brp and Marsh is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Brp Group 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 Brp 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 Brp Group 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 Brp i.e., Brp and Marsh McLennan go up and down completely randomly.

Pair Corralation between Brp and Marsh McLennan

If you would invest  21,042  in Marsh McLennan Companies on September 30, 2024 and sell it today you would earn a total of  305.00  from holding Marsh McLennan Companies or generate 1.45% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	0.79%
Values	Daily Returns

Brp Group  vs.  Marsh McLennan Companies

Brp Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Brp Group has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Brp is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Marsh McLennan Companies

Risk-Adjusted Performance

0 of 100

Very Weak

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 rather sound primary indicators, Marsh McLennan is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Brp and Marsh McLennan

The main advantage of trading using opposite Brp and Marsh McLennan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Brp 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 Brp Group 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.