Correlation Between Brookfield Asset and Marsh McLennan

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

By analyzing existing cross correlation between Brookfield Asset Management and Marsh McLennan Companies, you can compare the effects of market volatilities on Brookfield Asset and Marsh McLennan 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 Brookfield Asset with a short position of Marsh McLennan. Check out your portfolio center. Please also check ongoing floating volatility patterns of Brookfield Asset and Marsh McLennan.

Diversification Opportunities for Brookfield Asset and Marsh McLennan

0.64

Correlation Coefficient

Brookfield Asset  Marsh McLennan

Poor diversification

The 3 months correlation between Brookfield and Marsh is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Brookfield Asset Management and Marsh McLennan Companies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Marsh McLennan Companies and Brookfield Asset 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 Brookfield Asset Management are associated (or correlated) with Marsh McLennan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Marsh McLennan Companies has no effect on the direction of Brookfield Asset i.e., Brookfield Asset and Marsh McLennan go up and down completely randomly.

Pair Corralation between Brookfield Asset and Marsh McLennan

Considering the 90-day investment horizon Brookfield Asset Management is expected to under-perform the Marsh McLennan. In addition to that, Brookfield Asset is 1.19 times more volatile than Marsh McLennan Companies. It trades about -0.1 of its total potential returns per unit of risk. Marsh McLennan Companies is currently generating about -0.11 per unit of volatility. If you would invest  19,819  in Marsh McLennan Companies on August 4, 2025 and sell it today you would lose (2,004) from holding Marsh McLennan Companies or give up 10.11% of portfolio value over 90 days.

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

Brookfield Asset Management  vs.  Marsh McLennan Companies

Brookfield Asset Man

Risk-Adjusted Performance

Weakest

Over the last 90 days Brookfield Asset Management has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Marsh McLennan Companies

Risk-Adjusted Performance

Weakest

Over the last 90 days Marsh McLennan Companies has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Stock's primary indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Pair Trading with Brookfield Asset and Marsh McLennan

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

The idea behind Brookfield Asset Management and Marsh McLennan Companies 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.

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 the ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.