Correlation Between Aegon NV and Wendys
Can any of the company-specific risk be diversified away by investing in both Aegon NV and Wendys 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 Wendys 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 The Wendys Co, you can compare the effects of market volatilities on Aegon NV and Wendys 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 Wendys. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aegon NV and Wendys.
Diversification Opportunities for Aegon NV and Wendys
Poor diversification
The 3 months correlation between Aegon and Wendys is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Aegon NV ADR and The Wendys Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on The Wendys 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 Wendys. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of The Wendys has no effect on the direction of Aegon NV i.e., Aegon NV and Wendys go up and down completely randomly.
Pair Corralation between Aegon NV and Wendys
Considering the 90-day investment horizon Aegon NV ADR is expected to generate 1.09 times more return on investment than Wendys. However, Aegon NV is 1.09 times more volatile than The Wendys Co. It trades about 0.05 of its potential returns per unit of risk. The Wendys Co is currently generating about -0.01 per unit of risk. If you would invest 462.00 in Aegon NV ADR on August 31, 2024 and sell it today you would earn a total of 167.00 from holding Aegon NV ADR or generate 36.15% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.79% |
| Values | Daily Returns |
Aegon NV ADR vs. The Wendys Co
Performance |
| Timeline |
| Aegon NV ADR |
| The Wendys |
Aegon NV and Wendys Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aegon NV and Wendys
The main advantage of trading using opposite Aegon NV and Wendys positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aegon NV position performs unexpectedly, Wendys 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 Wendys will offset losses from the drop in Wendys' long position.| Aegon NV vs. American International Group | Aegon NV vs. Hartford Financial Services | Aegon NV vs. Goosehead Insurance | Aegon NV vs. Enstar Group Limited |
| Wendys vs. RLJ Lodging Trust | Wendys vs. Aquagold International | Wendys vs. Stepstone Group | Wendys vs. Morningstar Unconstrained Allocation |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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