Correlation Between Aon PLC and Selectquote

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

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

Diversification Opportunities for Aon PLC and Selectquote

-0.23

Correlation Coefficient

Aon PLC  Selectquote

Very good diversification

The 3 months correlation between Aon and Selectquote is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding Aon PLC and Selectquote in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Selectquote 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 Selectquote. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Selectquote has no effect on the direction of Aon PLC i.e., Aon PLC and Selectquote go up and down completely randomly.

Pair Corralation between Aon PLC and Selectquote

Considering the 90-day investment horizon Aon PLC is expected to generate 0.39 times more return on investment than Selectquote. However, Aon PLC is 2.56 times less risky than Selectquote. It trades about 0.0 of its potential returns per unit of risk. Selectquote is currently generating about -0.15 per unit of risk. If you would invest  35,475  in Aon PLC on May 5, 2025 and sell it today you would lose (129.00) from holding Aon PLC or give up 0.36% of portfolio value over 90 days.

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

Aon PLC  vs.  Selectquote

Aon PLC

Risk-Adjusted Performance

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.

Selectquote

Risk-Adjusted Performance

Very Weak

Over the last 90 days Selectquote has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of inconsistent performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in September 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Aon PLC and Selectquote

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

The idea behind Aon PLC and Selectquote 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.