Correlation Between Aegon NV and Asbury Automotive
Can any of the company-specific risk be diversified away by investing in both Aegon NV and Asbury Automotive 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 NV and Asbury Automotive into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Aegon NV ADR and Asbury Automotive Group, you can compare the effects of market volatilities on Aegon NV and Asbury Automotive 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 NV with a short position of Asbury Automotive. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aegon NV and Asbury Automotive.
Diversification Opportunities for Aegon NV and Asbury Automotive
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Aegon and Asbury is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Aegon NV ADR and Asbury Automotive Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Asbury Automotive and Aegon NV 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 NV ADR are associated (or correlated) with Asbury Automotive. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Asbury Automotive has no effect on the direction of Aegon NV i.e., Aegon NV and Asbury Automotive go up and down completely randomly.
Pair Corralation between Aegon NV and Asbury Automotive
Considering the 90-day investment horizon Aegon NV ADR is expected to under-perform the Asbury Automotive. But the stock apears to be less risky and, when comparing its historical volatility, Aegon NV ADR is 1.03 times less risky than Asbury Automotive. The stock trades about -0.1 of its potential returns per unit of risk. The Asbury Automotive Group is currently generating about -0.09 of returns per unit of risk over similar time horizon. If you would invest 26,575 in Asbury Automotive Group on September 12, 2024 and sell it today you would lose (901.00) from holding Asbury Automotive Group or give up 3.39% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Aegon NV ADR vs. Asbury Automotive Group
Performance |
| Timeline |
| Aegon NV ADR |
| Asbury Automotive |
Aegon NV and Asbury Automotive Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aegon NV and Asbury Automotive
The main advantage of trading using opposite Aegon NV and Asbury Automotive positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aegon NV position performs unexpectedly, Asbury Automotive 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 Asbury Automotive will offset losses from the drop in Asbury Automotive's long position.| Aegon NV vs. Hartford Financial Services | Aegon NV vs. Goosehead Insurance | Aegon NV vs. International General Insurance | Aegon NV vs. Enstar Group Limited |
| Asbury Automotive vs. Sonic Automotive | Asbury Automotive vs. Lithia Motors | Asbury Automotive vs. AutoNation | Asbury Automotive vs. Penske Automotive Group |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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