Correlation Between Globalfoundries and Aegon NV

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

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

Diversification Opportunities for Globalfoundries and Aegon NV

-0.29

Correlation Coefficient

Globalfoundries  Aegon NV

Very good diversification

The 3 months correlation between Globalfoundries and Aegon is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding Globalfoundries 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 Globalfoundries 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 Globalfoundries 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 Globalfoundries i.e., Globalfoundries and Aegon NV go up and down completely randomly.

Pair Corralation between Globalfoundries and Aegon NV

Considering the 90-day investment horizon Globalfoundries is expected to under-perform the Aegon NV. In addition to that, Globalfoundries is 1.38 times more volatile than Aegon NV ADR. It trades about -0.06 of its total potential returns per unit of risk. Aegon NV ADR is currently generating about 0.12 per unit of volatility. If you would invest  586.00  in Aegon NV ADR on December 28, 2024 and sell it today you would earn a total of  87.00  from holding Aegon NV ADR or generate 14.85% return on investment over 90 days.

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

Globalfoundries  vs.  Aegon NV ADR

Globalfoundries

Risk-Adjusted Performance

Very Weak

Over the last 90 days Globalfoundries has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest inconsistent performance, the Stock's technical and 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.

Aegon NV ADR

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Aegon NV ADR are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile technical and fundamental indicators, Aegon NV reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Globalfoundries and Aegon NV

The main advantage of trading using opposite Globalfoundries and Aegon NV positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Globalfoundries 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 Globalfoundries 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.