Correlation Between Willis Towers and Crawford

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

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

Diversification Opportunities for Willis Towers and Crawford

0.23

Correlation Coefficient

Willis Towers  Crawford

Modest diversification

The 3 months correlation between Willis and Crawford is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Willis Towers Watson and Crawford Company in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Crawford and Willis Towers 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 Willis Towers Watson are associated (or correlated) with Crawford. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Crawford has no effect on the direction of Willis Towers i.e., Willis Towers and Crawford go up and down completely randomly.

Pair Corralation between Willis Towers and Crawford

Considering the 90-day investment horizon Willis Towers Watson is expected to generate 0.55 times more return on investment than Crawford. However, Willis Towers Watson is 1.8 times less risky than Crawford. It trades about 0.12 of its potential returns per unit of risk. Crawford Company is currently generating about 0.0 per unit of risk. If you would invest  31,236  in Willis Towers Watson on December 29, 2024 and sell it today you would earn a total of  2,480  from holding Willis Towers Watson or generate 7.94% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Willis Towers Watson  vs.  Crawford Company

Willis Towers Watson

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Willis Towers Watson are ranked lower than 9 (%) 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 April 2025.

Crawford

Risk-Adjusted Performance

Very Weak

Over the last 90 days Crawford Company has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Crawford is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Willis Towers and Crawford

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

The idea behind Willis Towers Watson and Crawford Company 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.