Correlation Between Vodka Brands and Aegon NV

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

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

Diversification Opportunities for Vodka Brands and Aegon NV

-0.22

Correlation Coefficient

Vodka Brands  Aegon NV

Very good diversification

The 3 months correlation between Vodka and Aegon is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding Vodka Brands 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 Vodka Brands 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 Vodka Brands 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 Vodka Brands i.e., Vodka Brands and Aegon NV go up and down completely randomly.

Pair Corralation between Vodka Brands and Aegon NV

Given the investment horizon of 90 days Vodka Brands Corp is expected to generate 5.23 times more return on investment than Aegon NV. However, Vodka Brands is 5.23 times more volatile than Aegon NV ADR. It trades about 0.03 of its potential returns per unit of risk. Aegon NV ADR is currently generating about 0.04 per unit of risk. If you would invest  177.00  in Vodka Brands Corp on September 23, 2024 and sell it today you would lose (70.00) from holding Vodka Brands Corp or give up 39.55% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	99.8%
Values	Daily Returns

Vodka Brands Corp  vs.  Aegon NV ADR

Vodka Brands Corp

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Vodka Brands Corp are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong forward-looking signals, Vodka Brands is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Aegon NV ADR

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Aegon NV ADR has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's technical and fundamental indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with Vodka Brands and Aegon NV

The main advantage of trading using opposite Vodka Brands and Aegon NV positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vodka Brands 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 Vodka Brands 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.