Correlation Between Aegon NV and Fundamental Global

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

Diversification Opportunities for Aegon NV and Fundamental Global

0.22

Correlation Coefficient

Aegon NV  Fundamental Global

Modest diversification

The 3 months correlation between Aegon and Fundamental is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Aegon NV ADR and Fundamental Global in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fundamental Global 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 Fundamental Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fundamental Global has no effect on the direction of Aegon NV i.e., Aegon NV and Fundamental Global go up and down completely randomly.

Pair Corralation between Aegon NV and Fundamental Global

Considering the 90-day investment horizon Aegon NV ADR is expected to generate 0.31 times more return on investment than Fundamental Global. However, Aegon NV ADR is 3.23 times less risky than Fundamental Global. It trades about -0.02 of its potential returns per unit of risk. Fundamental Global is currently generating about -0.13 per unit of risk. If you would invest  649.00  in Aegon NV ADR on November 28, 2024 and sell it today you would lose (23.00) from holding Aegon NV ADR or give up 3.54% of portfolio value over 90 days.

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

Aegon NV ADR  vs.  Fundamental Global

Aegon NV ADR

Risk-Adjusted Performance

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.

Fundamental Global

Risk-Adjusted Performance

Very Weak

Over the last 90 days Fundamental Global has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's technical and fundamental indicators remain nearly stable which may send shares a bit higher in March 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Aegon NV and Fundamental Global

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

The idea behind Aegon NV ADR and Fundamental Global 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..