Correlation Between Marsh McLennan and Brp

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

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

Diversification Opportunities for Marsh McLennan and Brp

0.05

Correlation Coefficient

Marsh McLennan  Brp

Significant diversification

The 3 months correlation between Marsh and Brp is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Marsh McLennan Companies and Brp Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Brp Group and Marsh McLennan 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 Marsh McLennan Companies are associated (or correlated) with Brp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Brp Group has no effect on the direction of Marsh McLennan i.e., Marsh McLennan and Brp go up and down completely randomly.

Pair Corralation between Marsh McLennan and Brp

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

Marsh McLennan Companies  vs.  Brp Group

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.

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.

Pair Trading with Marsh McLennan and Brp

The main advantage of trading using opposite Marsh McLennan and Brp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Marsh McLennan position performs unexpectedly, Brp 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 Brp will offset losses from the drop in Brp's long position.

The idea behind Marsh McLennan Companies and Brp Group 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.