Correlation Between TWFG, and Marsh McLennan

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

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

Diversification Opportunities for TWFG, and Marsh McLennan

0.77

Correlation Coefficient

TWFG,  Marsh McLennan

Poor diversification

The 3 months correlation between TWFG, and Marsh is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding TWFG, Class A 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 TWFG, 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 TWFG, Class A 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 TWFG, i.e., TWFG, and Marsh McLennan go up and down completely randomly.

Pair Corralation between TWFG, and Marsh McLennan

Given the investment horizon of 90 days TWFG, Class A is expected to generate 2.91 times more return on investment than Marsh McLennan. However, TWFG, is 2.91 times more volatile than Marsh McLennan Companies. It trades about 0.11 of its potential returns per unit of risk. Marsh McLennan Companies is currently generating about 0.06 per unit of risk. If you would invest  2,201  in TWFG, Class A on October 21, 2024 and sell it today you would earn a total of  869.00  from holding TWFG, Class A or generate 39.48% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	25.81%
Values	Daily Returns

TWFG, Class A  vs.  Marsh McLennan Companies

TWFG, Class A

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days TWFG, Class A has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable technical and fundamental indicators, TWFG, is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

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 TWFG, and Marsh McLennan

The main advantage of trading using opposite TWFG, and Marsh McLennan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TWFG, 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 TWFG, Class A 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 Transaction History module to view history of all your transactions and understand their impact on performance.