Correlation Between Royce Micro and Aegon Funding
Can any of the company-specific risk be diversified away by investing in both Royce Micro and Aegon Funding 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 Royce Micro and Aegon Funding into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Royce Micro Cap and Aegon Funding, you can compare the effects of market volatilities on Royce Micro and Aegon Funding 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 Royce Micro with a short position of Aegon Funding. Check out your portfolio center. Please also check ongoing floating volatility patterns of Royce Micro and Aegon Funding.
Diversification Opportunities for Royce Micro and Aegon Funding
-0.62 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Royce and Aegon is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding Royce Micro Cap and Aegon Funding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aegon Funding and Royce Micro 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 Royce Micro Cap are associated (or correlated) with Aegon Funding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aegon Funding has no effect on the direction of Royce Micro i.e., Royce Micro and Aegon Funding go up and down completely randomly.
Pair Corralation between Royce Micro and Aegon Funding
Considering the 90-day investment horizon Royce Micro Cap is expected to generate 1.3 times more return on investment than Aegon Funding. However, Royce Micro is 1.3 times more volatile than Aegon Funding. It trades about 0.05 of its potential returns per unit of risk. Aegon Funding is currently generating about 0.04 per unit of risk. If you would invest 738.00 in Royce Micro Cap on September 14, 2024 and sell it today you would earn a total of 253.00 from holding Royce Micro Cap or generate 34.28% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Royce Micro Cap vs. Aegon Funding
Performance |
| Timeline |
| Royce Micro Cap |
| Aegon Funding |
Royce Micro and Aegon Funding Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Royce Micro and Aegon Funding
The main advantage of trading using opposite Royce Micro and Aegon Funding positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Royce Micro position performs unexpectedly, Aegon Funding 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 Funding will offset losses from the drop in Aegon Funding's long position.| Royce Micro vs. Visa Class A | Royce Micro vs. Diamond Hill Investment | Royce Micro vs. Distoken Acquisition | Royce Micro vs. AllianceBernstein Holding LP |
| Aegon Funding vs. RiverNorth Specialty Finance | Aegon Funding vs. Royce Micro Cap | Aegon Funding vs. First Trust Enhanced | Aegon Funding vs. Voya Global Advantage |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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