Correlation Between Aegon NV and CARRIER

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

Diversification Opportunities for Aegon NV and CARRIER

0.34

Correlation Coefficient

Aegon NV  CARRIER

Weak diversification

The 3 months correlation between Aegon and CARRIER is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Aegon NV ADR and CARRIER GLOBAL P in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CARRIER GLOBAL P 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 CARRIER. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CARRIER GLOBAL P has no effect on the direction of Aegon NV i.e., Aegon NV and CARRIER go up and down completely randomly.

Pair Corralation between Aegon NV and CARRIER

Considering the 90-day investment horizon Aegon NV ADR is expected to generate 3.09 times more return on investment than CARRIER. However, Aegon NV is 3.09 times more volatile than CARRIER GLOBAL P. It trades about 0.11 of its potential returns per unit of risk. CARRIER GLOBAL P is currently generating about -0.02 per unit of risk. If you would invest  583.00  in Aegon NV ADR on December 22, 2024 and sell it today you would earn a total of  75.00  from holding Aegon NV ADR or generate 12.86% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.36%
Values	Daily Returns

Aegon NV ADR  vs.  CARRIER GLOBAL P

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 8 (%) 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.

CARRIER GLOBAL P

Risk-Adjusted Performance

Very Weak

Over the last 90 days CARRIER GLOBAL P has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, CARRIER is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Aegon NV and CARRIER

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

The idea behind Aegon NV ADR and CARRIER GLOBAL P 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.