Correlation Between CorVel Corp and Aon PLC
Can any of the company-specific risk be diversified away by investing in both CorVel Corp 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 CorVel Corp and Aon PLC into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CorVel Corp and Aon PLC, you can compare the effects of market volatilities on CorVel Corp 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 CorVel Corp with a short position of Aon PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of CorVel Corp and Aon PLC.
Diversification Opportunities for CorVel Corp and Aon PLC
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between CorVel and Aon is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding CorVel Corp and Aon PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aon PLC and CorVel Corp 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 CorVel Corp 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 CorVel Corp i.e., CorVel Corp and Aon PLC go up and down completely randomly.
Pair Corralation between CorVel Corp and Aon PLC
Given the investment horizon of 90 days CorVel Corp is expected to under-perform the Aon PLC. In addition to that, CorVel Corp is 1.29 times more volatile than Aon PLC. It trades about -0.33 of its total potential returns per unit of risk. Aon PLC is currently generating about -0.22 per unit of volatility. If you would invest 32,652 in Aon PLC on January 21, 2024 and sell it today you would lose (1,633) from holding Aon PLC or give up 5.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
CorVel Corp vs. Aon PLC
Performance |
| Timeline |
| CorVel Corp |
| Aon PLC |
CorVel Corp and Aon PLC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CorVel Corp and Aon PLC
The main advantage of trading using opposite CorVel Corp and Aon PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CorVel Corp 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.| CorVel Corp vs. Erie Indemnity | CorVel Corp vs. Huize HoldingLtd | CorVel Corp vs. Crawford Company | CorVel Corp vs. eHealth |
| Aon PLC vs. Erie Indemnity | Aon PLC vs. Crawford Company | Aon PLC vs. Crawford Company | Aon PLC vs. CorVel Corp |
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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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