Correlation Between VULCAN MATERIALS and Aon PLC

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Can any of the company-specific risk be diversified away by investing in both VULCAN MATERIALS 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 VULCAN MATERIALS and Aon PLC into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between VULCAN MATERIALS and Aon PLC, you can compare the effects of market volatilities on VULCAN MATERIALS 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 VULCAN MATERIALS with a short position of Aon PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of VULCAN MATERIALS and Aon PLC.

Diversification Opportunities for VULCAN MATERIALS and Aon PLC

0.78
  Correlation Coefficient

Poor diversification

The 3 months correlation between VULCAN and Aon is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding VULCAN MATERIALS and Aon PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aon PLC and VULCAN MATERIALS 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 VULCAN MATERIALS 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 VULCAN MATERIALS i.e., VULCAN MATERIALS and Aon PLC go up and down completely randomly.

Pair Corralation between VULCAN MATERIALS and Aon PLC

If you would invest  0.00  in Aon PLC on October 9, 2024 and sell it today you would earn a total of  0.00  from holding Aon PLC or generate 0.0% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy2.7%
ValuesDaily Returns

VULCAN MATERIALS  vs.  Aon PLC

 Performance 
       Timeline  
VULCAN MATERIALS 

Risk-Adjusted Performance

9 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in VULCAN MATERIALS are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, VULCAN MATERIALS unveiled solid returns over the last few months and may actually be approaching a breakup point.
Aon PLC 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
OK
Over the last 90 days Aon PLC has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly weak basic indicators, Aon PLC may actually be approaching a critical reversion point that can send shares even higher in February 2025.

VULCAN MATERIALS and Aon PLC Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with VULCAN MATERIALS and Aon PLC

The main advantage of trading using opposite VULCAN MATERIALS and Aon PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if VULCAN MATERIALS 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.
The idea behind VULCAN MATERIALS and Aon PLC 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.
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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.

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