Correlation Between ICC Holdings and Aegon NV

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

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

Diversification Opportunities for ICC Holdings and Aegon NV

0.43

Correlation Coefficient

ICC Holdings  Aegon NV

Very weak diversification

The 3 months correlation between ICC and Aegon is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding ICC Holdings 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 ICC Holdings 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 ICC Holdings 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 ICC Holdings i.e., ICC Holdings and Aegon NV go up and down completely randomly.

Pair Corralation between ICC Holdings and Aegon NV

Given the investment horizon of 90 days ICC Holdings is expected to generate 30.69 times more return on investment than Aegon NV. However, ICC Holdings is 30.69 times more volatile than Aegon NV ADR. It trades about 0.05 of its potential returns per unit of risk. Aegon NV ADR is currently generating about 0.05 per unit of risk. If you would invest  1,575  in ICC Holdings on September 14, 2024 and sell it today you would earn a total of  755.00  from holding ICC Holdings or generate 47.94% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	84.62%
Values	Daily Returns

ICC Holdings  vs.  Aegon NV ADR

ICC Holdings

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in ICC Holdings are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong fundamental indicators, ICC Holdings 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

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Aegon NV ADR are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. 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 ICC Holdings and Aegon NV

The main advantage of trading using opposite ICC Holdings and Aegon NV positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ICC Holdings 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 ICC Holdings 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.