Correlation Between Aegon NV and Stepan
Can any of the company-specific risk be diversified away by investing in both Aegon NV and Stepan 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 Stepan 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 Stepan Company, you can compare the effects of market volatilities on Aegon NV and Stepan 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 Stepan. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aegon NV and Stepan.
Diversification Opportunities for Aegon NV and Stepan
Good diversification
The 3 months correlation between Aegon and Stepan is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding Aegon NV ADR and Stepan Company in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stepan Company 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 Stepan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Stepan Company has no effect on the direction of Aegon NV i.e., Aegon NV and Stepan go up and down completely randomly.
Pair Corralation between Aegon NV and Stepan
Considering the 90-day investment horizon Aegon NV ADR is expected to generate 1.52 times more return on investment than Stepan. However, Aegon NV is 1.52 times more volatile than Stepan Company. It trades about -0.07 of its potential returns per unit of risk. Stepan Company is currently generating about -0.11 per unit of risk. If you would invest 655.00 in Aegon NV ADR on December 1, 2024 and sell it today you would lose (27.00) from holding Aegon NV ADR or give up 4.12% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Aegon NV ADR vs. Stepan Company
Performance |
| Timeline |
| Aegon NV ADR |
| Stepan Company |
Aegon NV and Stepan Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aegon NV and Stepan
The main advantage of trading using opposite Aegon NV and Stepan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aegon NV position performs unexpectedly, Stepan 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 Stepan will offset losses from the drop in Stepan'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 |
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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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