Correlation Between Aegon NV and Udemy

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

Diversification Opportunities for Aegon NV and Udemy

0.35

Correlation Coefficient

Aegon NV  Udemy

Weak diversification

The 3 months correlation between Aegon and Udemy is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Aegon NV ADR and Udemy Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Udemy Inc 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 Udemy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Udemy Inc has no effect on the direction of Aegon NV i.e., Aegon NV and Udemy go up and down completely randomly.

Pair Corralation between Aegon NV and Udemy

Considering the 90-day investment horizon Aegon NV ADR is expected to generate 0.54 times more return on investment than Udemy. However, Aegon NV ADR is 1.84 times less risky than Udemy. It trades about 0.09 of its potential returns per unit of risk. Udemy Inc is currently generating about 0.05 per unit of risk. If you would invest  585.00  in Aegon NV ADR on September 4, 2024 and sell it today you would earn a total of  49.00  from holding Aegon NV ADR or generate 8.38% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.44%
Values	Daily Returns

Aegon NV ADR  vs.  Udemy Inc

Aegon NV ADR

Risk-Adjusted Performance

7 of 100

OK

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 unsteady technical and fundamental indicators, Aegon NV may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Udemy Inc

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Udemy Inc are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly uncertain primary indicators, Udemy may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Aegon NV and Udemy

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

The idea behind Aegon NV ADR and Udemy Inc 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.

Check out your portfolio center.

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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.