Correlation Between Western Asset and Aegon NV
Can any of the company-specific risk be diversified away by investing in both Western Asset 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 Western Asset and Aegon NV into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Western Asset Investment and Aegon NV ADR, you can compare the effects of market volatilities on Western Asset 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 Western Asset with a short position of Aegon NV. Check out your portfolio center. Please also check ongoing floating volatility patterns of Western Asset and Aegon NV.
Diversification Opportunities for Western Asset and Aegon NV
-0.6 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Western and Aegon is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding Western Asset Investment 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 Western Asset 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 Western Asset Investment 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 Western Asset i.e., Western Asset and Aegon NV go up and down completely randomly.
Pair Corralation between Western Asset and Aegon NV
Considering the 90-day investment horizon Western Asset Investment is expected to generate 0.33 times more return on investment than Aegon NV. However, Western Asset Investment is 3.05 times less risky than Aegon NV. It trades about -0.02 of its potential returns per unit of risk. Aegon NV ADR is currently generating about -0.03 per unit of risk. If you would invest 1,670 in Western Asset Investment on August 30, 2024 and sell it today you would lose (4.00) from holding Western Asset Investment or give up 0.24% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Western Asset Investment vs. Aegon NV ADR
Performance |
| Timeline |
| Western Asset Investment |
| Aegon NV ADR |
Western Asset and Aegon NV Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Western Asset and Aegon NV
The main advantage of trading using opposite Western Asset and Aegon NV positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Western Asset 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.| Western Asset vs. ClimateRock Class A | Western Asset vs. CF Acquisition VII | Western Asset vs. DP Cap Acquisition |
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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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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