Correlation Between Aon PLC and Allianz SE

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

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

Diversification Opportunities for Aon PLC and Allianz SE

-0.38

Correlation Coefficient

Aon PLC  Allianz SE

Very good diversification

The 3 months correlation between Aon and Allianz is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding Aon PLC and Allianz SE ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Allianz SE ADR 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 Allianz SE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Allianz SE ADR has no effect on the direction of Aon PLC i.e., Aon PLC and Allianz SE go up and down completely randomly.

Pair Corralation between Aon PLC and Allianz SE

If you would invest  34,633  in Aon PLC on September 19, 2024 and sell it today you would earn a total of  625.00  from holding Aon PLC or generate 1.8% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	1.56%
Values	Daily Returns

Aon PLC  vs.  Allianz SE ADR

Aon PLC

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Aon PLC are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. 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.

Allianz SE ADR

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Allianz SE ADR has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Allianz SE is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Aon PLC and Allianz SE

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

The idea behind Aon PLC and Allianz SE ADR 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.