Correlation Between Aon PLC and Apple
Can any of the company-specific risk be diversified away by investing in both Aon PLC and Apple 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 Aon PLC and Apple into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Aon PLC and Apple Inc, you can compare the effects of market volatilities on Aon PLC and Apple 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 Aon PLC with a short position of Apple. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aon PLC and Apple.
Diversification Opportunities for Aon PLC and Apple
Excellent diversification
The 3 months correlation between Aon and Apple is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding Aon PLC and Apple Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Apple Inc and Aon PLC 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 Aon PLC are associated (or correlated) with Apple. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Apple Inc has no effect on the direction of Aon PLC i.e., Aon PLC and Apple go up and down completely randomly.
Pair Corralation between Aon PLC and Apple
Considering the 90-day investment horizon Aon PLC is expected to generate 0.63 times more return on investment than Apple. However, Aon PLC is 1.59 times less risky than Apple. It trades about -0.23 of its potential returns per unit of risk. Apple Inc is currently generating about -0.19 per unit of risk. If you would invest 32,607 in Aon PLC on January 20, 2024 and sell it today you would lose (1,737) from holding Aon PLC or give up 5.33% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Aon PLC vs. Apple Inc
Performance |
| Timeline |
| Aon PLC |
| Apple Inc |
Aon PLC and Apple Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aon PLC and Apple
The main advantage of trading using opposite Aon PLC and Apple positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aon PLC position performs unexpectedly, Apple 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 Apple will offset losses from the drop in Apple's long position.| Aon PLC vs. Erie Indemnity | Aon PLC vs. Crawford Company | Aon PLC vs. Crawford Company | Aon PLC vs. Brp Group |
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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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