Correlation Between Aegon NV and Ecolab
Can any of the company-specific risk be diversified away by investing in both Aegon NV and Ecolab 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 Ecolab 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 Ecolab Inc, you can compare the effects of market volatilities on Aegon NV and Ecolab 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 Ecolab. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aegon NV and Ecolab.
Diversification Opportunities for Aegon NV and Ecolab
Average diversification
The 3 months correlation between Aegon and Ecolab is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding Aegon NV ADR and Ecolab Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ecolab Inc 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 Ecolab. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ecolab Inc has no effect on the direction of Aegon NV i.e., Aegon NV and Ecolab go up and down completely randomly.
Pair Corralation between Aegon NV and Ecolab
Considering the 90-day investment horizon Aegon NV is expected to generate 1.05 times less return on investment than Ecolab. In addition to that, Aegon NV is 1.31 times more volatile than Ecolab Inc. It trades about 0.04 of its total potential returns per unit of risk. Ecolab Inc is currently generating about 0.05 per unit of volatility. If you would invest 23,185 in Ecolab Inc on September 1, 2024 and sell it today you would earn a total of 1,692 from holding Ecolab Inc or generate 7.3% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Aegon NV ADR vs. Ecolab Inc
Performance |
| Timeline |
| Aegon NV ADR |
| Ecolab Inc |
Aegon NV and Ecolab Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aegon NV and Ecolab
The main advantage of trading using opposite Aegon NV and Ecolab positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aegon NV position performs unexpectedly, Ecolab 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 Ecolab will offset losses from the drop in Ecolab'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 |
| Ecolab vs. Linde plc Ordinary | Ecolab vs. Air Products and | Ecolab vs. Aquagold International | Ecolab vs. Thrivent High Yield |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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