Correlation Between SFL and Aegon Funding
Can any of the company-specific risk be diversified away by investing in both SFL 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 SFL and Aegon Funding into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SFL Corporation and Aegon Funding, you can compare the effects of market volatilities on SFL 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 SFL with a short position of Aegon Funding. Check out your portfolio center. Please also check ongoing floating volatility patterns of SFL and Aegon Funding.
Diversification Opportunities for SFL and Aegon Funding
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between SFL and Aegon is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding SFL Corp. and Aegon Funding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aegon Funding and SFL 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 SFL Corporation 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 SFL i.e., SFL and Aegon Funding go up and down completely randomly.
Pair Corralation between SFL and Aegon Funding
Considering the 90-day investment horizon SFL Corporation is expected to under-perform the Aegon Funding. In addition to that, SFL is 1.36 times more volatile than Aegon Funding. It trades about -0.08 of its total potential returns per unit of risk. Aegon Funding is currently generating about -0.11 per unit of volatility. If you would invest 2,133 in Aegon Funding on September 15, 2024 and sell it today you would lose (53.00) from holding Aegon Funding or give up 2.48% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
SFL Corp. vs. Aegon Funding
Performance |
| Timeline |
| SFL Corporation |
| Aegon Funding |
SFL and Aegon Funding Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SFL and Aegon Funding
The main advantage of trading using opposite SFL and Aegon Funding positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SFL 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.The idea behind SFL Corporation and Aegon Funding pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Aegon Funding vs. Lindblad Expeditions Holdings | Aegon Funding vs. SFL Corporation | Aegon Funding vs. Proficient Auto Logistics, | Aegon Funding vs. Aldel Financial II |
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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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