Correlation Between Aegon NV and NSI NV

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

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

Diversification Opportunities for Aegon NV and NSI NV

-0.51

Correlation Coefficient

Aegon NV  NSI NV

Excellent diversification

The 3 months correlation between Aegon and NSI is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding Aegon NV and NSI NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NSI NV 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 NSI NV. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NSI NV has no effect on the direction of Aegon NV i.e., Aegon NV and NSI NV go up and down completely randomly.

Pair Corralation between Aegon NV and NSI NV

Assuming the 90 days trading horizon Aegon NV is expected to generate 1.56 times more return on investment than NSI NV. However, Aegon NV is 1.56 times more volatile than NSI NV. It trades about 0.05 of its potential returns per unit of risk. NSI NV is currently generating about -0.12 per unit of risk. If you would invest  577.00  in Aegon NV on August 30, 2024 and sell it today you would earn a total of  15.00  from holding Aegon NV or generate 2.6% return on investment over 90 days.

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

Aegon NV  vs.  NSI NV

Aegon NV

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Aegon NV are ranked lower than 10 (%) 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 December 2024.

NSI NV

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days NSI NV has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable forward indicators, NSI NV 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 NSI NV

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

The idea behind Aegon NV and NSI NV 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.