Correlation Between Aon PLC and Sabre Insurance
Can any of the company-specific risk be diversified away by investing in both Aon PLC and Sabre Insurance 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 Sabre Insurance into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Aon PLC and Sabre Insurance Group, you can compare the effects of market volatilities on Aon PLC and Sabre Insurance 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 Sabre Insurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aon PLC and Sabre Insurance.
Diversification Opportunities for Aon PLC and Sabre Insurance
-0.69 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Aon and Sabre is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding Aon PLC and Sabre Insurance Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sabre Insurance Group 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 Sabre Insurance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sabre Insurance Group has no effect on the direction of Aon PLC i.e., Aon PLC and Sabre Insurance go up and down completely randomly.
Pair Corralation between Aon PLC and Sabre Insurance
Assuming the 90 days horizon Aon PLC is expected to generate 0.65 times more return on investment than Sabre Insurance. However, Aon PLC is 1.54 times less risky than Sabre Insurance. It trades about 0.09 of its potential returns per unit of risk. Sabre Insurance Group is currently generating about -0.02 per unit of risk. If you would invest 32,296 in Aon PLC on October 14, 2024 and sell it today you would earn a total of 2,084 from holding Aon PLC or generate 6.45% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Aon PLC vs. Sabre Insurance Group
Performance |
| Timeline |
| Aon PLC |
| Sabre Insurance Group |
Aon PLC and Sabre Insurance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aon PLC and Sabre Insurance
The main advantage of trading using opposite Aon PLC and Sabre Insurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aon PLC position performs unexpectedly, Sabre Insurance 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 Sabre Insurance will offset losses from the drop in Sabre Insurance's long position.| Aon PLC vs. Semiconductor Manufacturing International | Aon PLC vs. Hua Hong Semiconductor | Aon PLC vs. UNIQA INSURANCE GR | Aon PLC vs. Tower Semiconductor |
| Sabre Insurance vs. HYATT HOTELS A | Sabre Insurance vs. InterContinental Hotels Group | Sabre Insurance vs. Caseys General Stores | Sabre Insurance vs. Summit Hotel Properties |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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