Correlation Between Aegon NV and Opthea
Can any of the company-specific risk be diversified away by investing in both Aegon NV and Opthea 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 Opthea 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 Opthea, you can compare the effects of market volatilities on Aegon NV and Opthea 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 Opthea. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aegon NV and Opthea.
Diversification Opportunities for Aegon NV and Opthea
Poor diversification
The 3 months correlation between Aegon and Opthea is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Aegon NV ADR and Opthea in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Opthea 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 Opthea. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Opthea has no effect on the direction of Aegon NV i.e., Aegon NV and Opthea go up and down completely randomly.
Pair Corralation between Aegon NV and Opthea
Considering the 90-day investment horizon Aegon NV ADR is expected to generate 0.35 times more return on investment than Opthea. However, Aegon NV ADR is 2.84 times less risky than Opthea. It trades about 0.08 of its potential returns per unit of risk. Opthea is currently generating about -0.22 per unit of risk. If you would invest 635.00 in Aegon NV ADR on September 5, 2024 and sell it today you would earn a total of 17.00 from holding Aegon NV ADR or generate 2.68% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Aegon NV ADR vs. Opthea
Performance |
| Timeline |
| Aegon NV ADR |
| Opthea |
Aegon NV and Opthea Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aegon NV and Opthea
The main advantage of trading using opposite Aegon NV and Opthea positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aegon NV position performs unexpectedly, Opthea 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 Opthea will offset losses from the drop in Opthea's long position.| Aegon NV vs. Goosehead Insurance | Aegon NV vs. Enstar Group Limited | Aegon NV vs. American International Group | Aegon NV vs. Sun Life Financial |
| Opthea vs. Aegon NV ADR | Opthea vs. Assurant | Opthea vs. Modine Manufacturing | Opthea vs. Rivian Automotive |
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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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