Correlation Between Aegon NV and Mills Music

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

Diversification Opportunities for Aegon NV and Mills Music

-0.54

Correlation Coefficient

Aegon NV  Mills Music

Excellent diversification

The 3 months correlation between Aegon and Mills is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding Aegon NV ADR and Mills Music Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mills Music Trust 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 Mills Music. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mills Music Trust has no effect on the direction of Aegon NV i.e., Aegon NV and Mills Music go up and down completely randomly.

Pair Corralation between Aegon NV and Mills Music

Considering the 90-day investment horizon Aegon NV ADR is expected to generate 1.07 times more return on investment than Mills Music. However, Aegon NV is 1.07 times more volatile than Mills Music Trust. It trades about 0.13 of its potential returns per unit of risk. Mills Music Trust is currently generating about -0.14 per unit of risk. If you would invest  584.00  in Aegon NV ADR on December 27, 2024 and sell it today you would earn a total of  90.00  from holding Aegon NV ADR or generate 15.41% return on investment over 90 days.

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

Aegon NV ADR  vs.  Mills Music Trust

Aegon NV ADR

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Aegon NV ADR are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile technical and fundamental indicators, Aegon NV reported solid returns over the last few months and may actually be approaching a breakup point.

Mills Music Trust

Risk-Adjusted Performance

Very Weak

Over the last 90 days Mills Music Trust has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of conflicting performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Aegon NV and Mills Music

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

The idea behind Aegon NV ADR and Mills Music Trust 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.