Correlation Between Aegon NV and HE Equipment
Can any of the company-specific risk be diversified away by investing in both Aegon NV and HE Equipment 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 HE Equipment 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 HE Equipment Services, you can compare the effects of market volatilities on Aegon NV and HE Equipment 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 HE Equipment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aegon NV and HE Equipment.
Diversification Opportunities for Aegon NV and HE Equipment
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Aegon and HEES is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Aegon NV ADR and HE Equipment Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HE Equipment Services 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 HE Equipment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HE Equipment Services has no effect on the direction of Aegon NV i.e., Aegon NV and HE Equipment go up and down completely randomly.
Pair Corralation between Aegon NV and HE Equipment
Considering the 90-day investment horizon Aegon NV ADR is expected to under-perform the HE Equipment. But the stock apears to be less risky and, when comparing its historical volatility, Aegon NV ADR is 2.48 times less risky than HE Equipment. The stock trades about -0.05 of its potential returns per unit of risk. The HE Equipment Services is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 5,546 in HE Equipment Services on August 26, 2024 and sell it today you would earn a total of 330.00 from holding HE Equipment Services or generate 5.95% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Aegon NV ADR vs. HE Equipment Services
Performance |
| Timeline |
| Aegon NV ADR |
| HE Equipment Services |
Aegon NV and HE Equipment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aegon NV and HE Equipment
The main advantage of trading using opposite Aegon NV and HE Equipment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aegon NV position performs unexpectedly, HE Equipment 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 HE Equipment will offset losses from the drop in HE Equipment'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 |
| HE Equipment vs. PROG Holdings | HE Equipment vs. McGrath RentCorp | HE Equipment vs. Mega Matrix Corp | HE Equipment vs. FTAI Aviation Ltd |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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