Correlation Between Brp and Willis Towers

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

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

Diversification Opportunities for Brp and Willis Towers

0.22

Correlation Coefficient

Brp  Willis Towers

Modest diversification

The 3 months correlation between Brp and Willis is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Brp Group 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 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 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 Brp i.e., Brp and Willis Towers go up and down completely randomly.

Pair Corralation between Brp and Willis Towers

If you would invest  26,131  in Willis Towers Watson on September 30, 2024 and sell it today you would earn a total of  5,500  from holding Willis Towers Watson or generate 21.05% return on investment over 90 days.

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

Brp Group  vs.  Willis Towers Watson

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.

Willis Towers Watson

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Willis Towers Watson are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unsteady basic indicators, Willis Towers may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Brp and Willis Towers

The main advantage of trading using opposite Brp and Willis Towers positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Brp 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.

The idea behind Brp Group and Willis Towers Watson 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.