Correlation Between Aegon Funding and Navient SR

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

By analyzing existing cross correlation between Aegon Funding and Navient SR, you can compare the effects of market volatilities on Aegon Funding and Navient SR 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 Navient SR. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aegon Funding and Navient SR.

Diversification Opportunities for Aegon Funding and Navient SR

0.67

Correlation Coefficient

Aegon Funding  Navient SR

Poor diversification

The 3 months correlation between Aegon and Navient is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Aegon Funding and Navient SR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Navient SR 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 Navient SR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Navient SR has no effect on the direction of Aegon Funding i.e., Aegon Funding and Navient SR go up and down completely randomly.

Pair Corralation between Aegon Funding and Navient SR

Given the investment horizon of 90 days Aegon Funding is expected to generate 1.25 times less return on investment than Navient SR. But when comparing it to its historical volatility, Aegon Funding is 1.28 times less risky than Navient SR. It trades about 0.04 of its potential returns per unit of risk. Navient SR is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  1,607  in Navient SR on September 4, 2024 and sell it today you would earn a total of  414.00  from holding Navient SR or generate 25.76% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Aegon Funding  vs.  Navient SR

Aegon Funding

Risk-Adjusted Performance

0 of 100

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.

Navient SR

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Navient SR are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Navient SR is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Aegon Funding and Navient SR

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

The idea behind Aegon Funding and Navient SR 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.