Correlation Between Aegon NV and Nova Minerals

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

Diversification Opportunities for Aegon NV and Nova Minerals

-0.65

Correlation Coefficient

Aegon NV  Nova Minerals

Excellent diversification

The 3 months correlation between Aegon and Nova is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding Aegon NV ADR and Nova Minerals Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nova Minerals Limited 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 Nova Minerals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nova Minerals Limited has no effect on the direction of Aegon NV i.e., Aegon NV and Nova Minerals go up and down completely randomly.

Pair Corralation between Aegon NV and Nova Minerals

Considering the 90-day investment horizon Aegon NV is expected to generate 4.99 times less return on investment than Nova Minerals. But when comparing it to its historical volatility, Aegon NV ADR is 16.97 times less risky than Nova Minerals. It trades about 0.65 of its potential returns per unit of risk. Nova Minerals Limited is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest  440.00  in Nova Minerals Limited on October 20, 2024 and sell it today you would earn a total of  179.00  from holding Nova Minerals Limited or generate 40.68% return on investment over 90 days.

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

Aegon NV ADR  vs.  Nova Minerals Limited

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.

Nova Minerals Limited

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Nova Minerals Limited are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Nova Minerals showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Aegon NV and Nova Minerals

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

The idea behind Aegon NV ADR and Nova Minerals Limited 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 Transaction History module to view history of all your transactions and understand their impact on performance.