Correlation Between Marsh McLennan and MT Bank

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

Diversification Opportunities for Marsh McLennan and MT Bank

-0.62

Correlation Coefficient

Marsh McLennan  MT Bank

Excellent diversification

The 3 months correlation between Marsh and MTB is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding Marsh McLennan Companies and MT Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MT Bank 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 MT Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MT Bank has no effect on the direction of Marsh McLennan i.e., Marsh McLennan and MT Bank go up and down completely randomly.

Pair Corralation between Marsh McLennan and MT Bank

Considering the 90-day investment horizon Marsh McLennan Companies is expected to under-perform the MT Bank. But the stock apears to be less risky and, when comparing its historical volatility, Marsh McLennan Companies is 1.41 times less risky than MT Bank. The stock trades about -0.2 of its potential returns per unit of risk. The MT Bank is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  17,413  in MT Bank on May 5, 2025 and sell it today you would earn a total of  1,086  from holding MT Bank or generate 6.24% return on investment over 90 days.

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

Marsh McLennan Companies  vs.  MT Bank

Marsh McLennan Companies

Risk-Adjusted Performance

Very Weak

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 unfluctuating performance in the last few months, the Stock's primary indicators remain rather sound which may send shares a bit higher in September 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

MT Bank

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in MT Bank are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unsteady basic indicators, MT Bank may actually be approaching a critical reversion point that can send shares even higher in September 2025.

Pair Trading with Marsh McLennan and MT Bank

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

The idea behind Marsh McLennan Companies and MT Bank 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.