Correlation Between Willis Towers and GoHealth

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

Diversification Opportunities for Willis Towers and GoHealth

0.04

Correlation Coefficient

Willis Towers  GoHealth

Significant diversification

The 3 months correlation between Willis and GoHealth is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Willis Towers Watson and GoHealth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GoHealth 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 GoHealth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GoHealth has no effect on the direction of Willis Towers i.e., Willis Towers and GoHealth go up and down completely randomly.

Pair Corralation between Willis Towers and GoHealth

Considering the 90-day investment horizon Willis Towers Watson is expected to generate 0.21 times more return on investment than GoHealth. However, Willis Towers Watson is 4.79 times less risky than GoHealth. It trades about 0.12 of its potential returns per unit of risk. GoHealth is currently generating about 0.02 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	Insignificant
Accuracy	100.0%
Values	Daily Returns

Willis Towers Watson  vs.  GoHealth

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.

GoHealth

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in GoHealth are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy fundamental indicators, GoHealth is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Willis Towers and GoHealth

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

The idea behind Willis Towers Watson and GoHealth 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.