Correlation Between Definitive Healthcare and Aegon NV

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

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

Diversification Opportunities for Definitive Healthcare and Aegon NV

-0.15

Correlation Coefficient

Definitive Healthcare  Aegon NV

Good diversification

The 3 months correlation between Definitive and Aegon is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding Definitive Healthcare Corp 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 Definitive Healthcare 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 Definitive Healthcare Corp 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 Definitive Healthcare i.e., Definitive Healthcare and Aegon NV go up and down completely randomly.

Pair Corralation between Definitive Healthcare and Aegon NV

Allowing for the 90-day total investment horizon Definitive Healthcare Corp is expected to under-perform the Aegon NV. In addition to that, Definitive Healthcare is 2.34 times more volatile than Aegon NV ADR. It trades about -0.03 of its total potential returns per unit of risk. Aegon NV ADR is currently generating about 0.06 per unit of volatility. If you would invest  431.00  in Aegon NV ADR on September 5, 2024 and sell it today you would earn a total of  210.00  from holding Aegon NV ADR or generate 48.72% return on investment over 90 days.

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

Definitive Healthcare Corp  vs.  Aegon NV ADR

Definitive Healthcare

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Definitive Healthcare Corp are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong technical indicators, Definitive Healthcare is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

Aegon NV ADR

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Aegon NV ADR are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady technical and fundamental indicators, Aegon NV may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Definitive Healthcare and Aegon NV

The main advantage of trading using opposite Definitive Healthcare and Aegon NV positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Definitive Healthcare 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 Definitive Healthcare Corp 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.