Correlation Between Aegon Funding and Argo Group

Can any of the company-specific risk be diversified away by investing in both Aegon Funding and Argo Group 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 Funding and Argo Group into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Aegon Funding and Argo Group 65, you can compare the effects of market volatilities on Aegon Funding and Argo Group 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 Funding with a short position of Argo Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aegon Funding and Argo Group.

Diversification Opportunities for Aegon Funding and Argo Group

0.37

Correlation Coefficient

Aegon Funding  Argo Group

Weak diversification

The 3 months correlation between Aegon and Argo is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Aegon Funding and Argo Group 65 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Argo Group 65 and Aegon Funding 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 Funding are associated (or correlated) with Argo Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Argo Group 65 has no effect on the direction of Aegon Funding i.e., Aegon Funding and Argo Group go up and down completely randomly.

Pair Corralation between Aegon Funding and Argo Group

Given the investment horizon of 90 days Aegon Funding is expected to generate 1.16 times more return on investment than Argo Group. However, Aegon Funding is 1.16 times more volatile than Argo Group 65. It trades about 0.03 of its potential returns per unit of risk. Argo Group 65 is currently generating about 0.03 per unit of risk. If you would invest  1,852  in Aegon Funding on November 20, 2024 and sell it today you would earn a total of  241.00  from holding Aegon Funding or generate 13.01% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	99.8%
Values	Daily Returns

Aegon Funding  vs.  Argo Group 65

Aegon Funding

Risk-Adjusted Performance

Very Weak

Over the last 90 days Aegon Funding has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, Aegon Funding is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

Argo Group 65

Risk-Adjusted Performance

Very Weak

Over the last 90 days Argo Group 65 has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, Argo Group is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Aegon Funding and Argo Group

The main advantage of trading using opposite Aegon Funding and Argo Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aegon Funding position performs unexpectedly, Argo Group 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 Argo Group will offset losses from the drop in Argo Group's long position.

The idea behind Aegon Funding and Argo Group 65 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.

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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.