Correlation Between Ford and Aegon NV

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

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

Diversification Opportunities for Ford and Aegon NV

0.0

Correlation Coefficient

Ford  Aegon NV

Pay attention - limited upside

The 3 months correlation between Ford and Aegon is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and Aegon NV PRP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aegon NV PRP and Ford 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 Ford Motor 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 PRP has no effect on the direction of Ford i.e., Ford and Aegon NV go up and down completely randomly.

Pair Corralation between Ford and Aegon NV

If you would invest (100.00) in Aegon NV PRP on February 3, 2024 and sell it today you would earn a total of  100.00  from holding Aegon NV PRP or generate -100.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Ford Motor  vs.  Aegon NV PRP

Ford Motor

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Ford Motor are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady technical and fundamental indicators, Ford may actually be approaching a critical reversion point that can send shares even higher in June 2024.

Aegon NV PRP

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Aegon NV PRP has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong technical and fundamental indicators, Aegon NV is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Ford and Aegon NV

The main advantage of trading using opposite Ford and Aegon NV positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford 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 Ford Motor and Aegon NV PRP 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.