Correlation Between Aegon NV and Capital Clean

Can any of the company-specific risk be diversified away by investing in both Aegon NV and Capital Clean 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 Capital Clean 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 Capital Clean Energy, you can compare the effects of market volatilities on Aegon NV and Capital Clean 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 Capital Clean. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aegon NV and Capital Clean.

Diversification Opportunities for Aegon NV and Capital Clean

0.2

Correlation Coefficient

Aegon NV  Capital Clean

Modest diversification

The 3 months correlation between Aegon and Capital is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Aegon NV ADR and Capital Clean Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Capital Clean Energy 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 Capital Clean. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Capital Clean Energy has no effect on the direction of Aegon NV i.e., Aegon NV and Capital Clean go up and down completely randomly.

Pair Corralation between Aegon NV and Capital Clean

Considering the 90-day investment horizon Aegon NV ADR is expected to under-perform the Capital Clean. In addition to that, Aegon NV is 1.22 times more volatile than Capital Clean Energy. It trades about -0.19 of its total potential returns per unit of risk. Capital Clean Energy is currently generating about 0.01 per unit of volatility. If you would invest  1,829  in Capital Clean Energy on October 13, 2024 and sell it today you would earn a total of  4.00  from holding Capital Clean Energy or generate 0.22% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	95.0%
Values	Daily Returns

Aegon NV ADR  vs.  Capital Clean Energy

Aegon NV ADR

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Aegon NV ADR has generated negative risk-adjusted returns adding no value to investors with long positions. 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.

Capital Clean Energy

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Aegon NV and Capital Clean

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

The idea behind Aegon NV ADR and Capital Clean Energy 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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.