Correlation Between Aegon NV and CVC Capital

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

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

Diversification Opportunities for Aegon NV and CVC Capital

0.6

Correlation Coefficient

Aegon NV  CVC Capital

Poor diversification

The 3 months correlation between Aegon and CVC is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Aegon NV and CVC Capital Partners in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CVC Capital Partners 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 CVC Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CVC Capital Partners has no effect on the direction of Aegon NV i.e., Aegon NV and CVC Capital go up and down completely randomly.

Pair Corralation between Aegon NV and CVC Capital

Assuming the 90 days trading horizon Aegon NV is expected to generate 0.89 times more return on investment than CVC Capital. However, Aegon NV is 1.13 times less risky than CVC Capital. It trades about 0.09 of its potential returns per unit of risk. CVC Capital Partners is currently generating about -0.07 per unit of risk. If you would invest  567.00  in Aegon NV on December 26, 2024 and sell it today you would earn a total of  58.00  from holding Aegon NV or generate 10.23% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.41%
Values	Daily Returns

Aegon NV  vs.  CVC Capital Partners

Aegon NV

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Aegon NV are ranked lower than 7 (%) 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.

CVC Capital Partners

Risk-Adjusted Performance

Very Weak

Over the last 90 days CVC Capital Partners has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's fundamental indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with Aegon NV and CVC Capital

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

The idea behind Aegon NV and CVC Capital Partners 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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.