Correlation Between Willis Towers and FANH Old

Can any of the company-specific risk be diversified away by investing in both Willis Towers and FANH Old 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 FANH Old 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 FANH Old, you can compare the effects of market volatilities on Willis Towers and FANH Old 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 FANH Old. Check out your portfolio center. Please also check ongoing floating volatility patterns of Willis Towers and FANH Old.

Diversification Opportunities for Willis Towers and FANH Old

0.19

Correlation Coefficient

Willis Towers  FANH Old

Average diversification

The 3 months correlation between Willis and FANH is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding Willis Towers Watson and FANH Old in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FANH Old 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 FANH Old. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FANH Old has no effect on the direction of Willis Towers i.e., Willis Towers and FANH Old go up and down completely randomly.

Pair Corralation between Willis Towers and FANH Old

Considering the 90-day investment horizon Willis Towers Watson is expected to generate 0.31 times more return on investment than FANH Old. However, Willis Towers Watson is 3.27 times less risky than FANH Old. It trades about 0.04 of its potential returns per unit of risk. FANH Old is currently generating about -0.06 per unit of risk. If you would invest  24,498  in Willis Towers Watson on October 10, 2024 and sell it today you would earn a total of  6,402  from holding Willis Towers Watson or generate 26.13% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	89.9%
Values	Daily Returns

Willis Towers Watson  vs.  FANH Old

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 February 2025.

FANH Old

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days FANH Old has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unsteady performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in February 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Pair Trading with Willis Towers and FANH Old

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

The idea behind Willis Towers Watson and FANH Old 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.