Correlation Between Aegon NV and Air Lease

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

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

Diversification Opportunities for Aegon NV and Air Lease

0.44

Correlation Coefficient

Aegon NV  Air Lease

Very weak diversification

The 3 months correlation between Aegon and Air is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Aegon NV ADR and Air Lease in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Air Lease and Aegon NV 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 NV ADR are associated (or correlated) with Air Lease. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Air Lease has no effect on the direction of Aegon NV i.e., Aegon NV and Air Lease go up and down completely randomly.

Pair Corralation between Aegon NV and Air Lease

Considering the 90-day investment horizon Aegon NV ADR is expected to generate 0.9 times more return on investment than Air Lease. However, Aegon NV ADR is 1.11 times less risky than Air Lease. It trades about 0.05 of its potential returns per unit of risk. Air Lease is currently generating about 0.04 per unit of risk. If you would invest  458.00  in Aegon NV ADR on September 14, 2024 and sell it today you would earn a total of  174.00  from holding Aegon NV ADR or generate 37.99% return on investment over 90 days.

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

Aegon NV ADR  vs.  Air Lease

Aegon NV ADR

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Aegon NV ADR are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable technical and fundamental indicators, Aegon NV is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Air Lease

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Air Lease are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite quite unfluctuating essential indicators, Air Lease may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Aegon NV and Air Lease

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

The idea behind Aegon NV ADR and Air Lease 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.

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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.