Correlation Between Dow Jones and Aegon NV
Can any of the company-specific risk be diversified away by investing in both Dow Jones and Aegon NV 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 Dow Jones and Aegon NV into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dow Jones Industrial and Aegon NV ADR, you can compare the effects of market volatilities on Dow Jones and Aegon NV 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 Dow Jones with a short position of Aegon NV. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and Aegon NV.
Diversification Opportunities for Dow Jones and Aegon NV
Poor diversification
The 3 months correlation between Dow and Aegon is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and Aegon NV ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aegon NV ADR and Dow Jones 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 Dow Jones Industrial are associated (or correlated) with Aegon NV. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aegon NV ADR has no effect on the direction of Dow Jones i.e., Dow Jones and Aegon NV go up and down completely randomly.
Pair Corralation between Dow Jones and Aegon NV
Assuming the 90 days trading horizon Dow Jones Industrial is expected to generate 0.49 times more return on investment than Aegon NV. However, Dow Jones Industrial is 2.02 times less risky than Aegon NV. It trades about 0.16 of its potential returns per unit of risk. Aegon NV ADR is currently generating about 0.02 per unit of risk. If you would invest 3,857,103 in Dow Jones Industrial on August 30, 2024 and sell it today you would earn a total of 615,103 from holding Dow Jones Industrial or generate 15.95% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dow Jones Industrial vs. Aegon NV ADR
Performance |
| Timeline |
Dow Jones and Aegon NV Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
Aegon NV ADR
Pair trading matchups for Aegon NV
Pair Trading with Dow Jones and Aegon NV
The main advantage of trading using opposite Dow Jones and Aegon NV positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, Aegon NV 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 Aegon NV will offset losses from the drop in Aegon NV's long position.| Dow Jones vs. Skillful Craftsman Education | Dow Jones vs. Acco Brands | Dow Jones vs. Cracker Barrel Old | Dow Jones vs. Coursera |
| 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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