Correlation Between Microsoft and Aon PLC
Can any of the company-specific risk be diversified away by investing in both Microsoft 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 Microsoft and Aon PLC into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and Aon PLC, you can compare the effects of market volatilities on Microsoft 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 Microsoft with a short position of Aon PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and Aon PLC.
Diversification Opportunities for Microsoft and Aon PLC
Pay attention - limited upside
The 3 months correlation between Microsoft and Aon is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and Aon PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aon PLC and Microsoft 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 Microsoft 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 Microsoft i.e., Microsoft and Aon PLC go up and down completely randomly.
Pair Corralation between Microsoft and Aon PLC
If you would invest 43,053 in Microsoft on October 28, 2024 and sell it today you would earn a total of 1,353 from holding Microsoft or generate 3.14% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 0.0% |
| Values | Daily Returns |
Microsoft vs. Aon PLC
Performance |
| Timeline |
| Microsoft |
| Aon PLC |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Microsoft and Aon PLC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microsoft and Aon PLC
The main advantage of trading using opposite Microsoft and Aon PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft 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.| Microsoft vs. Palo Alto Networks | Microsoft vs. Uipath Inc | Microsoft vs. BLOCK INC | Microsoft vs. Adobe Systems Incorporated |
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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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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