Correlation Between Valneva SE and Aegon NV

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

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

Diversification Opportunities for Valneva SE and Aegon NV

-0.63

Correlation Coefficient

Valneva SE  Aegon NV

Excellent diversification

The 3 months correlation between Valneva and Aegon is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding Valneva SE ADR 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 Valneva SE 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 Valneva SE ADR 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 Valneva SE i.e., Valneva SE and Aegon NV go up and down completely randomly.

Pair Corralation between Valneva SE and Aegon NV

Given the investment horizon of 90 days Valneva SE ADR is expected to under-perform the Aegon NV. In addition to that, Valneva SE is 1.85 times more volatile than Aegon NV ADR. It trades about -0.36 of its total potential returns per unit of risk. Aegon NV ADR is currently generating about 0.09 per unit of volatility. If you would invest  582.00  in Aegon NV ADR on August 31, 2024 and sell it today you would earn a total of  47.00  from holding Aegon NV ADR or generate 8.08% return on investment over 90 days.

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

Valneva SE ADR  vs.  Aegon NV ADR

Valneva SE ADR

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Valneva SE ADR has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's essential indicators remain very healthy which may send shares a bit higher in December 2024. The recent disarray may also be a sign of long period up-swing for the firm investors.

Aegon NV ADR

Risk-Adjusted Performance

7 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Aegon NV ADR are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile technical and fundamental indicators, Aegon NV may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Pair Trading with Valneva SE and Aegon NV

The main advantage of trading using opposite Valneva SE and Aegon NV positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Valneva SE 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 Valneva SE ADR 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.