Correlation Between Aegon NV and ABN Amro

Can any of the company-specific risk be diversified away by investing in both Aegon NV and ABN Amro 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 ABN Amro into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Aegon NV and ABN Amro Group, you can compare the effects of market volatilities on Aegon NV and ABN Amro 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 ABN Amro. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aegon NV and ABN Amro.

Diversification Opportunities for Aegon NV and ABN Amro

0.02

Correlation Coefficient

Aegon NV  ABN Amro

Significant diversification

The 3 months correlation between Aegon and ABN is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding Aegon NV and ABN Amro Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ABN Amro Group 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 are associated (or correlated) with ABN Amro. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ABN Amro Group has no effect on the direction of Aegon NV i.e., Aegon NV and ABN Amro go up and down completely randomly.

Pair Corralation between Aegon NV and ABN Amro

Assuming the 90 days trading horizon Aegon NV is expected to generate 3.58 times less return on investment than ABN Amro. In addition to that, Aegon NV is 1.03 times more volatile than ABN Amro Group. It trades about 0.07 of its total potential returns per unit of risk. ABN Amro Group is currently generating about 0.26 per unit of volatility. If you would invest  1,479  in ABN Amro Group on December 29, 2024 and sell it today you would earn a total of  489.00  from holding ABN Amro Group or generate 33.06% return on investment over 90 days.

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

Aegon NV  vs.  ABN Amro Group

Aegon NV

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Aegon NV are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Aegon NV may actually be approaching a critical reversion point that can send shares even higher in April 2025.

ABN Amro Group

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in ABN Amro Group are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, ABN Amro unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Aegon NV and ABN Amro

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

The idea behind Aegon NV and ABN Amro Group 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.