Correlation Between Aegon NV and Hawkins

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

Diversification Opportunities for Aegon NV and Hawkins

0.07

Correlation Coefficient

Aegon NV  Hawkins

Significant diversification

The 3 months correlation between Aegon and Hawkins is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Aegon NV ADR and Hawkins in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hawkins 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 Hawkins. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hawkins has no effect on the direction of Aegon NV i.e., Aegon NV and Hawkins go up and down completely randomly.

Pair Corralation between Aegon NV and Hawkins

Considering the 90-day investment horizon Aegon NV is expected to generate 5.7 times less return on investment than Hawkins. But when comparing it to its historical volatility, Aegon NV ADR is 1.69 times less risky than Hawkins. It trades about 0.03 of its potential returns per unit of risk. Hawkins is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  7,134  in Hawkins on September 20, 2024 and sell it today you would earn a total of  4,692  from holding Hawkins or generate 65.77% return on investment over 90 days.

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

Aegon NV ADR  vs.  Hawkins

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.

Hawkins

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Hawkins has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy forward-looking signals, Hawkins is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Aegon NV and Hawkins

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

The idea behind Aegon NV ADR and Hawkins 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.