Correlation Between Aegon NV and Sensient Technologies
Can any of the company-specific risk be diversified away by investing in both Aegon NV and Sensient Technologies 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 Sensient Technologies 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 Sensient Technologies, you can compare the effects of market volatilities on Aegon NV and Sensient Technologies 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 Sensient Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aegon NV and Sensient Technologies.
Diversification Opportunities for Aegon NV and Sensient Technologies
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Aegon and Sensient is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Aegon NV ADR and Sensient Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sensient Technologies 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 Sensient Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sensient Technologies has no effect on the direction of Aegon NV i.e., Aegon NV and Sensient Technologies go up and down completely randomly.
Pair Corralation between Aegon NV and Sensient Technologies
Considering the 90-day investment horizon Aegon NV ADR is expected to generate 0.99 times more return on investment than Sensient Technologies. However, Aegon NV ADR is 1.01 times less risky than Sensient Technologies. It trades about 0.06 of its potential returns per unit of risk. Sensient Technologies is currently generating about 0.02 per unit of risk. If you would invest 442.00 in Aegon NV ADR on September 3, 2024 and sell it today you would earn a total of 207.00 from holding Aegon NV ADR or generate 46.83% 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. Sensient Technologies
Performance |
| Timeline |
| Aegon NV ADR |
| Sensient Technologies |
Aegon NV and Sensient Technologies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aegon NV and Sensient Technologies
The main advantage of trading using opposite Aegon NV and Sensient Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aegon NV position performs unexpectedly, Sensient Technologies 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 Sensient Technologies will offset losses from the drop in Sensient Technologies' long position.| Aegon NV vs. Global Indemnity PLC | Aegon NV vs. Erie Indemnity | Aegon NV vs. AMERISAFE | Aegon NV vs. Diamond Hill Investment |
| Sensient Technologies vs. SPACE | Sensient Technologies vs. Bayview Acquisition Corp | Sensient Technologies vs. T Rowe Price | Sensient Technologies vs. Ampleforth |
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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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