Correlation Between Aegon NV and JPM P

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

Diversification Opportunities for Aegon NV and JPM P

0.53

Correlation Coefficient

Aegon NV  JPM P

Very weak diversification

The 3 months correlation between Aegon and JPM is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Aegon NV ADR and JPM P J in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JPM P J 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 JPM P. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JPM P J has no effect on the direction of Aegon NV i.e., Aegon NV and JPM P go up and down completely randomly.

Pair Corralation between Aegon NV and JPM P

Considering the 90-day investment horizon Aegon NV ADR is expected to generate 1.87 times more return on investment than JPM P. However, Aegon NV is 1.87 times more volatile than JPM P J. It trades about 0.03 of its potential returns per unit of risk. JPM P J is currently generating about 0.0 per unit of risk. If you would invest  492.00  in Aegon NV ADR on October 4, 2024 and sell it today you would earn a total of  97.00  from holding Aegon NV ADR or generate 19.72% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	99.6%
Values	Daily Returns

Aegon NV ADR  vs.  JPM P J

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.

JPM P J

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days JPM P J has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest weak performance, the Preferred Stock's forward-looking indicators remain steady and the new chaos on Wall Street may also be a sign of medium-term gains for the company stakeholders.

Pair Trading with Aegon NV and JPM P

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

The idea behind Aegon NV ADR and JPM P J 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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.