Correlation Between Aegon NV and Compania Cervecerias
Can any of the company-specific risk be diversified away by investing in both Aegon NV and Compania Cervecerias 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 Compania Cervecerias 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 Compania Cervecerias Unidas, you can compare the effects of market volatilities on Aegon NV and Compania Cervecerias 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 Compania Cervecerias. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aegon NV and Compania Cervecerias.
Diversification Opportunities for Aegon NV and Compania Cervecerias
0.28 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Aegon and Compania is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding Aegon NV ADR and Compania Cervecerias Unidas in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Compania Cervecerias 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 Compania Cervecerias. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Compania Cervecerias has no effect on the direction of Aegon NV i.e., Aegon NV and Compania Cervecerias go up and down completely randomly.
Pair Corralation between Aegon NV and Compania Cervecerias
Considering the 90-day investment horizon Aegon NV ADR is expected to generate 0.84 times more return on investment than Compania Cervecerias. However, Aegon NV ADR is 1.19 times less risky than Compania Cervecerias. It trades about -0.09 of its potential returns per unit of risk. Compania Cervecerias Unidas is currently generating about -0.12 per unit of risk. If you would invest 641.00 in Aegon NV ADR on August 27, 2024 and sell it today you would lose (18.00) from holding Aegon NV ADR or give up 2.81% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Aegon NV ADR vs. Compania Cervecerias Unidas
Performance |
| Timeline |
| Aegon NV ADR |
| Compania Cervecerias |
Aegon NV and Compania Cervecerias Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aegon NV and Compania Cervecerias
The main advantage of trading using opposite Aegon NV and Compania Cervecerias positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aegon NV position performs unexpectedly, Compania Cervecerias 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 Compania Cervecerias will offset losses from the drop in Compania Cervecerias' 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 |
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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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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