Correlation Between Aegon NV and Arch Capital
Can any of the company-specific risk be diversified away by investing in both Aegon NV and Arch Capital 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 Arch Capital 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 Arch Capital Group, you can compare the effects of market volatilities on Aegon NV and Arch Capital 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 Arch Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aegon NV and Arch Capital.
Diversification Opportunities for Aegon NV and Arch Capital
0.58 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Aegon and Arch is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Aegon NV ADR and Arch Capital Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Arch Capital Group 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 Arch Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Arch Capital Group has no effect on the direction of Aegon NV i.e., Aegon NV and Arch Capital go up and down completely randomly.
Pair Corralation between Aegon NV and Arch Capital
Considering the 90-day investment horizon Aegon NV is expected to generate 1.91 times less return on investment than Arch Capital. In addition to that, Aegon NV is 1.03 times more volatile than Arch Capital Group. It trades about 0.04 of its total potential returns per unit of risk. Arch Capital Group is currently generating about 0.07 per unit of volatility. If you would invest 7,620 in Arch Capital Group on October 20, 2024 and sell it today you would earn a total of 1,931 from holding Arch Capital Group or generate 25.34% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Aegon NV ADR vs. Arch Capital Group
Performance |
| Timeline |
| Aegon NV ADR |
| Arch Capital Group |
Aegon NV and Arch Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aegon NV and Arch Capital
The main advantage of trading using opposite Aegon NV and Arch Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aegon NV position performs unexpectedly, Arch Capital 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 Arch Capital will offset losses from the drop in Arch Capital'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 |
| Arch Capital vs. Axa Equitable Holdings | Arch Capital vs. American International Group | Arch Capital vs. Old Republic International | Arch Capital vs. Sun Life 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
Other Complementary Tools
| Pattern Recognition Use different Pattern Recognition models to time the market across multiple global exchanges | |
| FinTech Suite Use AI to screen and filter profitable investment opportunities | |
| Portfolio Backtesting Avoid under-diversification and over-optimization by backtesting your portfolios | |
| Watchlist Optimization Optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm | |
| Competition Analyzer Analyze and compare many basic indicators for a group of related or unrelated entities |