Correlation Between Flow Traders and Aegon NV

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

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

Diversification Opportunities for Flow Traders and Aegon NV

0.74

Correlation Coefficient

Flow Traders  Aegon NV

Poor diversification

The 3 months correlation between Flow and Aegon is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Flow Traders BV and Aegon NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aegon NV and Flow Traders 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 Flow Traders BV 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 has no effect on the direction of Flow Traders i.e., Flow Traders and Aegon NV go up and down completely randomly.

Pair Corralation between Flow Traders and Aegon NV

Assuming the 90 days trading horizon Flow Traders BV is expected to generate 1.07 times more return on investment than Aegon NV. However, Flow Traders is 1.07 times more volatile than Aegon NV. It trades about 0.18 of its potential returns per unit of risk. Aegon NV is currently generating about 0.16 per unit of risk. If you would invest  1,806  in Flow Traders BV on September 12, 2024 and sell it today you would earn a total of  302.00  from holding Flow Traders BV or generate 16.72% return on investment over 90 days.

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

Flow Traders BV  vs.  Aegon NV

Flow Traders BV

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Flow Traders BV are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Flow Traders unveiled solid returns over the last few months and may actually be approaching a breakup point.

Aegon NV

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Aegon NV are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Aegon NV may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Flow Traders and Aegon NV

The main advantage of trading using opposite Flow Traders and Aegon NV positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Flow Traders 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 Flow Traders BV and Aegon NV 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.