Correlation Between Compagnie and Aegon NV

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

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

Diversification Opportunities for Compagnie and Aegon NV

0.68

Correlation Coefficient

Compagnie  Aegon NV

Poor diversification

The 3 months correlation between Compagnie and Aegon is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Compagnie de Saint Gobain and Aegon NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aegon NV and Compagnie 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 Compagnie de Saint Gobain 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 Compagnie i.e., Compagnie and Aegon NV go up and down completely randomly.

Pair Corralation between Compagnie and Aegon NV

Assuming the 90 days trading horizon Compagnie de Saint Gobain is expected to generate 0.87 times more return on investment than Aegon NV. However, Compagnie de Saint Gobain is 1.14 times less risky than Aegon NV. It trades about 0.07 of its potential returns per unit of risk. Aegon NV is currently generating about 0.01 per unit of risk. If you would invest  8,338  in Compagnie de Saint Gobain on September 20, 2024 and sell it today you would earn a total of  452.00  from holding Compagnie de Saint Gobain or generate 5.42% return on investment over 90 days.

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

Compagnie de Saint Gobain  vs.  Aegon NV

Compagnie de Saint

Risk-Adjusted Performance

5 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Compagnie de Saint Gobain are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Compagnie is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Aegon NV

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Aegon NV has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Aegon NV is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Compagnie and Aegon NV

The main advantage of trading using opposite Compagnie and Aegon NV positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Compagnie 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 Compagnie de Saint Gobain 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.