Correlation Between Crawford and Aon PLC

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

By analyzing existing cross correlation between Crawford Company and Aon PLC, you can compare the effects of market volatilities on Crawford and Aon PLC 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 Crawford with a short position of Aon PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Crawford and Aon PLC.

Diversification Opportunities for Crawford and Aon PLC

-0.37

Correlation Coefficient

Crawford  Aon PLC

Very good diversification

The 3 months correlation between Crawford and Aon is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Crawford Company and Aon PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aon PLC and Crawford 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 Crawford Company are associated (or correlated) with Aon PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aon PLC has no effect on the direction of Crawford i.e., Crawford and Aon PLC go up and down completely randomly.

Pair Corralation between Crawford and Aon PLC

Assuming the 90 days horizon Crawford Company is expected to generate 0.94 times more return on investment than Aon PLC. However, Crawford Company is 1.06 times less risky than Aon PLC. It trades about 0.09 of its potential returns per unit of risk. Aon PLC is currently generating about -0.38 per unit of risk. If you would invest  902.00  in Crawford Company on February 2, 2024 and sell it today you would earn a total of  26.00  from holding Crawford Company or generate 2.88% return on investment over 90 days.

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

Crawford Company  vs.  Aon PLC

Crawford

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Crawford Company has generated negative risk-adjusted returns adding no value to investors with long positions. Despite inconsistent performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in June 2024. The current disturbance may also be a sign of long term up-swing for the company investors.

Aon PLC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Aon PLC has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Aon PLC is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Crawford and Aon PLC

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

The idea behind Crawford Company and Aon PLC 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.