Correlation Between Aegon NV and Maiden Holdings

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

Diversification Opportunities for Aegon NV and Maiden Holdings

0.77

Correlation Coefficient

Aegon NV  Maiden Holdings

Poor diversification

The 3 months correlation between Aegon and Maiden is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Aegon NV ADR and Maiden Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Maiden Holdings 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 Maiden Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Maiden Holdings has no effect on the direction of Aegon NV i.e., Aegon NV and Maiden Holdings go up and down completely randomly.

Pair Corralation between Aegon NV and Maiden Holdings

Considering the 90-day investment horizon Aegon NV ADR is expected to generate 1.23 times more return on investment than Maiden Holdings. However, Aegon NV is 1.23 times more volatile than Maiden Holdings. It trades about -0.01 of its potential returns per unit of risk. Maiden Holdings is currently generating about -0.06 per unit of risk. If you would invest  633.00  in Aegon NV ADR on August 31, 2024 and sell it today you would lose (4.00) from holding Aegon NV ADR or give up 0.63% of portfolio value over 90 days.

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

Aegon NV ADR  vs.  Maiden Holdings

Aegon NV ADR

Risk-Adjusted Performance

7 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Aegon NV ADR are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile technical and fundamental indicators, Aegon NV may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Maiden Holdings

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Maiden Holdings are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unsteady essential indicators, Maiden Holdings may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Pair Trading with Aegon NV and Maiden Holdings

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

The idea behind Aegon NV ADR and Maiden Holdings 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..