Correlation Between Aon PLC and BancFirst
Can any of the company-specific risk be diversified away by investing in both Aon PLC and BancFirst 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 BancFirst into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Aon PLC and BancFirst, you can compare the effects of market volatilities on Aon PLC and BancFirst 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 BancFirst. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aon PLC and BancFirst.
Diversification Opportunities for Aon PLC and BancFirst
Pay attention - limited upside
The 3 months correlation between Aon and BancFirst is -0.76. Overlapping area represents the amount of risk that can be diversified away by holding Aon PLC and BancFirst in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BancFirst 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 BancFirst. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BancFirst has no effect on the direction of Aon PLC i.e., Aon PLC and BancFirst go up and down completely randomly.
Pair Corralation between Aon PLC and BancFirst
Considering the 90-day investment horizon Aon PLC is expected to generate 0.31 times more return on investment than BancFirst. However, Aon PLC is 3.21 times less risky than BancFirst. It trades about 0.51 of its potential returns per unit of risk. BancFirst is currently generating about 0.02 per unit of risk. If you would invest 31,539 in Aon PLC on December 29, 2023 and sell it today you would earn a total of 1,840 from holding Aon PLC or generate 5.83% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Aon PLC vs. BancFirst
Performance |
Timeline |
Aon PLC |
BancFirst |
Aon PLC and BancFirst Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Aon PLC and BancFirst
The main advantage of trading using opposite Aon PLC and BancFirst positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aon PLC position performs unexpectedly, BancFirst 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 BancFirst will offset losses from the drop in BancFirst's long position.Aon PLC vs. Electrovaya Common Shares | Aon PLC vs. Highway Holdings Limited | Aon PLC vs. Falcon Metals Limited | Aon PLC vs. Anheuser Busch Inbev |
BancFirst vs. Merchants Bancorp | BancFirst vs. MetroCity Bankshares | BancFirst vs. Macatawa Bank | BancFirst vs. Axos Financial |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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