Correlation Between Marsh McLennan and BlackBerry

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Can any of the company-specific risk be diversified away by investing in both Marsh McLennan and BlackBerry 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 Marsh McLennan and BlackBerry into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Marsh McLennan Companies and BlackBerry, you can compare the effects of market volatilities on Marsh McLennan and BlackBerry 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 Marsh McLennan with a short position of BlackBerry. Check out your portfolio center. Please also check ongoing floating volatility patterns of Marsh McLennan and BlackBerry.

Diversification Opportunities for Marsh McLennan and BlackBerry

0.17
  Correlation Coefficient

Average diversification

The 3 months correlation between Marsh and BlackBerry is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding Marsh McLennan Companies and BlackBerry in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BlackBerry and Marsh McLennan 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 Marsh McLennan Companies are associated (or correlated) with BlackBerry. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BlackBerry has no effect on the direction of Marsh McLennan i.e., Marsh McLennan and BlackBerry go up and down completely randomly.

Pair Corralation between Marsh McLennan and BlackBerry

Considering the 90-day investment horizon Marsh McLennan Companies is expected to generate 0.26 times more return on investment than BlackBerry. However, Marsh McLennan Companies is 3.81 times less risky than BlackBerry. It trades about 0.07 of its potential returns per unit of risk. BlackBerry is currently generating about 0.01 per unit of risk. If you would invest  11,162  in Marsh McLennan Companies on September 5, 2022 and sell it today you would earn a total of  6,229  from holding Marsh McLennan Companies or generate 55.81% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Marsh McLennan Companies  vs.  BlackBerry

 Performance (%) 
       Timeline  
Marsh McLennan Companies 
Marsh Performance
5 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Marsh McLennan Companies are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unfluctuating primary indicators, Marsh McLennan may actually be approaching a critical reversion point that can send shares even higher in January 2023.

Marsh Price Channel

BlackBerry 
BlackBerry Performance
0 of 100
Over the last 90 days BlackBerry has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong fundamental drivers, BlackBerry is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

BlackBerry Price Channel

Marsh McLennan and BlackBerry Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Marsh McLennan and BlackBerry

The main advantage of trading using opposite Marsh McLennan and BlackBerry positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Marsh McLennan position performs unexpectedly, BlackBerry 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 BlackBerry will offset losses from the drop in BlackBerry's long position.
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The idea behind Marsh McLennan Companies and BlackBerry 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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Check out your portfolio center. 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..

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