Correlation Between SBM Offshore and Aegon NV

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

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

Diversification Opportunities for SBM Offshore and Aegon NV

0.67

Correlation Coefficient

SBM Offshore  Aegon NV

Poor diversification

The 3 months correlation between SBM and Aegon is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding SBM Offshore NV and Aegon NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aegon NV and SBM Offshore 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 SBM Offshore NV 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 SBM Offshore i.e., SBM Offshore and Aegon NV go up and down completely randomly.

Pair Corralation between SBM Offshore and Aegon NV

Assuming the 90 days trading horizon SBM Offshore is expected to generate 3.12 times less return on investment than Aegon NV. In addition to that, SBM Offshore is 1.03 times more volatile than Aegon NV. It trades about 0.04 of its total potential returns per unit of risk. Aegon NV is currently generating about 0.14 per unit of volatility. If you would invest  544.00  in Aegon NV on September 13, 2024 and sell it today you would earn a total of  64.00  from holding Aegon NV or generate 11.76% return on investment over 90 days.

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

SBM Offshore NV  vs.  Aegon NV

SBM Offshore NV

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in SBM Offshore NV are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, SBM Offshore is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Aegon NV

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Aegon NV are ranked lower than 11 (%) 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 SBM Offshore and Aegon NV

The main advantage of trading using opposite SBM Offshore and Aegon NV positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SBM Offshore 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 SBM Offshore NV 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.

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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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.