Correlation Between AMERISAFE and Aegon NV

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

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

Diversification Opportunities for AMERISAFE and Aegon NV

-0.01

Correlation Coefficient

AMERISAFE  Aegon NV

Good diversification

The 3 months correlation between AMERISAFE and Aegon is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding AMERISAFE and Aegon NV ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aegon NV ADR and AMERISAFE 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 AMERISAFE are associated (or correlated) with Aegon NV. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aegon NV ADR has no effect on the direction of AMERISAFE i.e., AMERISAFE and Aegon NV go up and down completely randomly.

Pair Corralation between AMERISAFE and Aegon NV

Given the investment horizon of 90 days AMERISAFE is expected to generate 3.56 times less return on investment than Aegon NV. But when comparing it to its historical volatility, AMERISAFE is 1.12 times less risky than Aegon NV. It trades about 0.02 of its potential returns per unit of risk. Aegon NV ADR is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  410.00  in Aegon NV ADR on December 1, 2024 and sell it today you would earn a total of  218.00  from holding Aegon NV ADR or generate 53.17% return on investment over 90 days.

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

AMERISAFE  vs.  Aegon NV ADR

AMERISAFE

Risk-Adjusted Performance

Very Weak

Over the last 90 days AMERISAFE has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unfluctuating performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Aegon NV ADR

Risk-Adjusted Performance

Very Weak

Over the last 90 days Aegon NV ADR has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable technical and fundamental indicators, Aegon NV is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with AMERISAFE and Aegon NV

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

The idea behind AMERISAFE and Aegon NV ADR 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.