Correlation Between Citigroup and Aegon NV

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

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

Diversification Opportunities for Citigroup and Aegon NV

0.72

Correlation Coefficient

Citigroup  Aegon NV

Poor diversification

The 3 months correlation between Citigroup and Aegon is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Aegon NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aegon NV and Citigroup 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 Citigroup 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 has no effect on the direction of Citigroup i.e., Citigroup and Aegon NV go up and down completely randomly.

Pair Corralation between Citigroup and Aegon NV

Taking into account the 90-day investment horizon Citigroup is expected to generate 2.01 times less return on investment than Aegon NV. In addition to that, Citigroup is 1.07 times more volatile than Aegon NV. It trades about 0.03 of its total potential returns per unit of risk. Aegon NV is currently generating about 0.07 per unit of volatility. If you would invest  567.00  in Aegon NV on December 29, 2024 and sell it today you would earn a total of  42.00  from holding Aegon NV or generate 7.41% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	95.31%
Values	Daily Returns

Citigroup  vs.  Aegon NV

Citigroup

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Citigroup are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound fundamental indicators, Citigroup is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

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.

Pair Trading with Citigroup and Aegon NV

The main advantage of trading using opposite Citigroup and Aegon NV positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup 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 Citigroup and Aegon 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.