Correlation Between Aegon NV and International General

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

Diversification Opportunities for Aegon NV and International General

0.64

Correlation Coefficient

Aegon NV  International General

Poor diversification

The 3 months correlation between Aegon and International is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Aegon NV ADR and International General Insuranc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on International General 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 International General. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of International General has no effect on the direction of Aegon NV i.e., Aegon NV and International General go up and down completely randomly.

Pair Corralation between Aegon NV and International General

Considering the 90-day investment horizon Aegon NV is expected to generate 3.19 times less return on investment than International General. But when comparing it to its historical volatility, Aegon NV ADR is 1.73 times less risky than International General. It trades about 0.14 of its potential returns per unit of risk. International General Insurance is currently generating about 0.26 of returns per unit of risk over similar time horizon. If you would invest  2,453  in International General Insurance on November 19, 2024 and sell it today you would earn a total of  224.00  from holding International General Insurance or generate 9.13% return on investment over 90 days.

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

Aegon NV ADR  vs.  International General Insuranc

Aegon NV ADR

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Aegon NV ADR are ranked lower than 5 (%) 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.

International General

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in International General Insurance are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak forward indicators, International General may actually be approaching a critical reversion point that can send shares even higher in March 2025.

Pair Trading with Aegon NV and International General

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

The idea behind Aegon NV ADR and International General Insurance 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.