Correlation Between Aegon NV and SUNation Energy

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

Diversification Opportunities for Aegon NV and SUNation Energy

0.31

Correlation Coefficient

Aegon NV  SUNation Energy

Weak diversification

The 3 months correlation between Aegon and SUNation is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Aegon NV ADR and SUNation Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SUNation Energy 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 SUNation Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SUNation Energy has no effect on the direction of Aegon NV i.e., Aegon NV and SUNation Energy go up and down completely randomly.

Pair Corralation between Aegon NV and SUNation Energy

Considering the 90-day investment horizon Aegon NV ADR is expected to generate 0.3 times more return on investment than SUNation Energy. However, Aegon NV ADR is 3.34 times less risky than SUNation Energy. It trades about 0.01 of its potential returns per unit of risk. SUNation Energy is currently generating about -0.24 per unit of risk. If you would invest  641.00  in Aegon NV ADR on October 26, 2024 and sell it today you would earn a total of  4.00  from holding Aegon NV ADR or generate 0.62% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.33%
Values	Daily Returns

Aegon NV ADR  vs.  SUNation Energy

Aegon NV ADR

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Aegon NV ADR are ranked lower than 1 (%) 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.

SUNation Energy

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SUNation Energy has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in February 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Aegon NV and SUNation Energy

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

The idea behind Aegon NV ADR and SUNation Energy 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.