Correlation Between Aegon NV and Koninklijke Ahold

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

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

Diversification Opportunities for Aegon NV and Koninklijke Ahold

0.48

Correlation Coefficient

Aegon NV  Koninklijke Ahold

Very weak diversification

The 3 months correlation between Aegon and Koninklijke is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Aegon NV and Koninklijke Ahold Delhaize in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Koninklijke Ahold 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 Koninklijke Ahold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Koninklijke Ahold has no effect on the direction of Aegon NV i.e., Aegon NV and Koninklijke Ahold go up and down completely randomly.

Pair Corralation between Aegon NV and Koninklijke Ahold

Assuming the 90 days trading horizon Aegon NV is expected to generate 1.31 times more return on investment than Koninklijke Ahold. However, Aegon NV is 1.31 times more volatile than Koninklijke Ahold Delhaize. It trades about 0.16 of its potential returns per unit of risk. Koninklijke Ahold Delhaize is currently generating about 0.08 per unit of risk. If you would invest  538.00  in Aegon NV on September 1, 2024 and sell it today you would earn a total of  72.00  from holding Aegon NV or generate 13.38% return on investment over 90 days.

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

Aegon NV  vs.  Koninklijke Ahold Delhaize

Aegon NV

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Aegon NV are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Aegon NV unveiled solid returns over the last few months and may actually be approaching a breakup point.

Koninklijke Ahold

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Koninklijke Ahold Delhaize are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Koninklijke Ahold is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Aegon NV and Koninklijke Ahold

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

The idea behind Aegon NV and Koninklijke Ahold Delhaize 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.