Correlation Between Aegon Funding and American Financial
Can any of the company-specific risk be diversified away by investing in both Aegon Funding and American Financial 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 Aegon Funding and American Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Aegon Funding and American Financial Group, you can compare the effects of market volatilities on Aegon Funding and American Financial 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 Aegon Funding with a short position of American Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aegon Funding and American Financial.
Diversification Opportunities for Aegon Funding and American Financial
0.31 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Aegon and American is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Aegon Funding and American Financial Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Financial and Aegon Funding 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 Aegon Funding are associated (or correlated) with American Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Financial has no effect on the direction of Aegon Funding i.e., Aegon Funding and American Financial go up and down completely randomly.
Pair Corralation between Aegon Funding and American Financial
Given the investment horizon of 90 days Aegon Funding is expected to under-perform the American Financial. But the stock apears to be less risky and, when comparing its historical volatility, Aegon Funding is 1.06 times less risky than American Financial. The stock trades about -0.15 of its potential returns per unit of risk. The American Financial Group is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest 1,996 in American Financial Group on August 28, 2024 and sell it today you would lose (5.00) from holding American Financial Group or give up 0.25% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Aegon Funding vs. American Financial Group
Performance |
| Timeline |
| Aegon Funding |
| American Financial |
Aegon Funding and American Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aegon Funding and American Financial
The main advantage of trading using opposite Aegon Funding and American Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aegon Funding position performs unexpectedly, American Financial 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 American Financial will offset losses from the drop in American Financial's long position.| Aegon Funding vs. Diamond Estates Wines | Aegon Funding vs. Keurig Dr Pepper | Aegon Funding vs. Valneva SE ADR | Aegon Funding vs. National Beverage Corp |
| American Financial vs. American Financial Group | American Financial vs. American Financial Group | American Financial vs. American Financial Group | American Financial vs. Reinsurance Group of |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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