Correlation Between Aegon NV and Summit Midstream

Can any of the company-specific risk be diversified away by investing in both Aegon NV and Summit Midstream 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 Summit Midstream 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 Summit Midstream, you can compare the effects of market volatilities on Aegon NV and Summit Midstream 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 Summit Midstream. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aegon NV and Summit Midstream.

Diversification Opportunities for Aegon NV and Summit Midstream

0.17

Correlation Coefficient

Aegon NV  Summit Midstream

Average diversification

The 3 months correlation between Aegon and Summit is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding Aegon NV ADR and Summit Midstream in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Summit Midstream 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 Summit Midstream. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Summit Midstream has no effect on the direction of Aegon NV i.e., Aegon NV and Summit Midstream go up and down completely randomly.

Pair Corralation between Aegon NV and Summit Midstream

Considering the 90-day investment horizon Aegon NV ADR is expected to under-perform the Summit Midstream. In addition to that, Aegon NV is 1.72 times more volatile than Summit Midstream. It trades about -0.19 of its total potential returns per unit of risk. Summit Midstream is currently generating about -0.29 per unit of volatility. If you would invest  3,736  in Summit Midstream on September 24, 2024 and sell it today you would lose (242.00) from holding Summit Midstream or give up 6.48% of portfolio value over 90 days.

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

Aegon NV ADR  vs.  Summit Midstream

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.

Summit Midstream

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Summit Midstream has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound primary indicators, Summit Midstream is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Aegon NV and Summit Midstream

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

The idea behind Aegon NV ADR and Summit Midstream 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.