Correlation Between Willis Towers and TWFG,

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

Diversification Opportunities for Willis Towers and TWFG,

0.84

Correlation Coefficient

Willis Towers  TWFG,

Very poor diversification

The 3 months correlation between Willis and TWFG, is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Willis Towers Watson and TWFG, Class A in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TWFG, Class A 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 TWFG,. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TWFG, Class A has no effect on the direction of Willis Towers i.e., Willis Towers and TWFG, go up and down completely randomly.

Pair Corralation between Willis Towers and TWFG,

Considering the 90-day investment horizon Willis Towers is expected to generate 5.51 times less return on investment than TWFG,. But when comparing it to its historical volatility, Willis Towers Watson is 2.06 times less risky than TWFG,. It trades about 0.05 of its potential returns per unit of risk. TWFG, Class A is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  2,201  in TWFG, Class A on September 19, 2024 and sell it today you would earn a total of  835.00  from holding TWFG, Class A or generate 37.94% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	21.62%
Values	Daily Returns

Willis Towers Watson  vs.  TWFG, Class A

Willis Towers Watson

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Willis Towers Watson are ranked lower than 8 (%) 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 January 2025.

TWFG, Class A

Risk-Adjusted Performance

7 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in TWFG, Class A are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly inconsistent technical and fundamental indicators, TWFG, reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Willis Towers and TWFG,

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

The idea behind Willis Towers Watson and TWFG, Class A 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.