Correlation Between Aegon NV and Triton International
Can any of the company-specific risk be diversified away by investing in both Aegon NV and Triton International 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 Triton International 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 Triton International Limited, you can compare the effects of market volatilities on Aegon NV and Triton International 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 Triton International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aegon NV and Triton International.
Diversification Opportunities for Aegon NV and Triton International
0.04 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Aegon and Triton is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Aegon NV ADR and Triton International Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Triton International 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 Triton International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Triton International has no effect on the direction of Aegon NV i.e., Aegon NV and Triton International go up and down completely randomly.
Pair Corralation between Aegon NV and Triton International
Considering the 90-day investment horizon Aegon NV ADR is expected to generate 1.2 times more return on investment than Triton International. However, Aegon NV is 1.2 times more volatile than Triton International Limited. It trades about 0.05 of its potential returns per unit of risk. Triton International Limited is currently generating about 0.03 per unit of risk. If you would invest 438.00 in Aegon NV ADR on August 30, 2024 and sell it today you would earn a total of 191.00 from holding Aegon NV ADR or generate 43.61% 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. Triton International Limited
Performance |
| Timeline |
| Aegon NV ADR |
| Triton International |
Aegon NV and Triton International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aegon NV and Triton International
The main advantage of trading using opposite Aegon NV and Triton International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aegon NV position performs unexpectedly, Triton International 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 Triton International will offset losses from the drop in Triton International'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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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