Correlation Between Aegon NV and NioCorp Developments

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Can any of the company-specific risk be diversified away by investing in both Aegon NV and NioCorp Developments 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 NioCorp Developments 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 NioCorp Developments Ltd, you can compare the effects of market volatilities on Aegon NV and NioCorp Developments 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 NioCorp Developments. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aegon NV and NioCorp Developments.

Diversification Opportunities for Aegon NV and NioCorp Developments

-0.21
  Correlation Coefficient

Very good diversification

The 3 months correlation between Aegon and NioCorp is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding Aegon NV ADR and NioCorp Developments Ltd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NioCorp Developments 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 NioCorp Developments. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NioCorp Developments has no effect on the direction of Aegon NV i.e., Aegon NV and NioCorp Developments go up and down completely randomly.

Pair Corralation between Aegon NV and NioCorp Developments

Considering the 90-day investment horizon Aegon NV ADR is expected to generate 0.43 times more return on investment than NioCorp Developments. However, Aegon NV ADR is 2.32 times less risky than NioCorp Developments. It trades about 0.1 of its potential returns per unit of risk. NioCorp Developments Ltd is currently generating about -0.37 per unit of risk. If you would invest  628.00  in Aegon NV ADR on September 1, 2024 and sell it today you would earn a total of  21.00  from holding Aegon NV ADR or generate 3.34% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Aegon NV ADR  vs.  NioCorp Developments Ltd

 Performance 
       Timeline  
Aegon NV ADR 

Risk-Adjusted Performance

9 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in Aegon NV ADR are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile technical and fundamental indicators, Aegon NV may actually be approaching a critical reversion point that can send shares even higher in December 2024.
NioCorp Developments 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days NioCorp Developments Ltd has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's fundamental drivers remain somewhat strong which may send shares a bit higher in December 2024. The current disturbance may also be a sign of long term up-swing for the company investors.

Aegon NV and NioCorp Developments Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Aegon NV and NioCorp Developments

The main advantage of trading using opposite Aegon NV and NioCorp Developments positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aegon NV position performs unexpectedly, NioCorp Developments 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 NioCorp Developments will offset losses from the drop in NioCorp Developments' long position.
The idea behind Aegon NV ADR and NioCorp Developments Ltd pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .

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