Correlation Between Aegon NV and Hooker Furniture

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

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

Diversification Opportunities for Aegon NV and Hooker Furniture

0.64

Correlation Coefficient

Aegon NV  Hooker Furniture

Poor diversification

The 3 months correlation between Aegon and Hooker is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Aegon NV ADR and Hooker Furniture in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hooker Furniture and Aegon NV 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 Aegon NV ADR are associated (or correlated) with Hooker Furniture. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hooker Furniture has no effect on the direction of Aegon NV i.e., Aegon NV and Hooker Furniture go up and down completely randomly.

Pair Corralation between Aegon NV and Hooker Furniture

Considering the 90-day investment horizon Aegon NV ADR is expected to under-perform the Hooker Furniture. But the stock apears to be less risky and, when comparing its historical volatility, Aegon NV ADR is 1.92 times less risky than Hooker Furniture. The stock trades about -0.01 of its potential returns per unit of risk. The Hooker Furniture is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  1,404  in Hooker Furniture on September 29, 2024 and sell it today you would lose (63.00) from holding Hooker Furniture or give up 4.49% of portfolio value over 90 days.

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

Aegon NV ADR  vs.  Hooker Furniture

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.

Hooker Furniture

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Hooker Furniture has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's technical and fundamental indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Aegon NV and Hooker Furniture

The main advantage of trading using opposite Aegon NV and Hooker Furniture positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aegon NV position performs unexpectedly, Hooker Furniture 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 Hooker Furniture will offset losses from the drop in Hooker Furniture's long position.

The idea behind Aegon NV ADR and Hooker Furniture 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 Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .