Correlation Between Aon PLC and Baldwin Insurance
Can any of the company-specific risk be diversified away by investing in both Aon PLC and Baldwin 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 Baldwin 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 The Baldwin Insurance, you can compare the effects of market volatilities on Aon PLC and Baldwin 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 Baldwin Insurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aon PLC and Baldwin Insurance.
Diversification Opportunities for Aon PLC and Baldwin Insurance
-0.3 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Aon and Baldwin is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding Aon PLC and The Baldwin Insurance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Baldwin Insurance 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 Baldwin Insurance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Baldwin Insurance has no effect on the direction of Aon PLC i.e., Aon PLC and Baldwin Insurance go up and down completely randomly.
Pair Corralation between Aon PLC and Baldwin Insurance
Considering the 90-day investment horizon Aon PLC is expected to generate 1.32 times less return on investment than Baldwin Insurance. But when comparing it to its historical volatility, Aon PLC is 3.77 times less risky than Baldwin Insurance. It trades about 0.26 of its potential returns per unit of risk. The Baldwin Insurance is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 4,617 in The Baldwin Insurance on September 4, 2024 and sell it today you would earn a total of 291.00 from holding The Baldwin Insurance or generate 6.3% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Aon PLC vs. The Baldwin Insurance
Performance |
| Timeline |
| Aon PLC |
| Baldwin Insurance |
Aon PLC and Baldwin Insurance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aon PLC and Baldwin Insurance
The main advantage of trading using opposite Aon PLC and Baldwin Insurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aon PLC position performs unexpectedly, Baldwin 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 Baldwin Insurance will offset losses from the drop in Baldwin Insurance's long position.| Aon PLC vs. Arthur J Gallagher | Aon PLC vs. Brown Brown | Aon PLC vs. Willis Towers Watson | Aon PLC vs. Erie Indemnity |
| Baldwin Insurance vs. Aspen Insurance Holdings | Baldwin Insurance vs. Pekin Life Insurance | Baldwin Insurance vs. Bright Scholar Education | Baldwin Insurance vs. NI Holdings |
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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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