Correlation Between Aegon NV and Axa Equitable

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

Diversification Opportunities for Aegon NV and Axa Equitable

0.82

Correlation Coefficient

Aegon NV  Axa Equitable

Very poor diversification

The 3 months correlation between Aegon and Axa is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Aegon NV ADR and Axa Equitable Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Axa Equitable Holdings 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 Axa Equitable. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Axa Equitable Holdings has no effect on the direction of Aegon NV i.e., Aegon NV and Axa Equitable go up and down completely randomly.

Pair Corralation between Aegon NV and Axa Equitable

Considering the 90-day investment horizon Aegon NV ADR is expected to generate 0.84 times more return on investment than Axa Equitable. However, Aegon NV ADR is 1.19 times less risky than Axa Equitable. It trades about -0.01 of its potential returns per unit of risk. Axa Equitable Holdings is currently generating about -0.03 per unit of risk. If you would invest  631.00  in Aegon NV ADR on January 16, 2025 and sell it today you would lose (26.00) from holding Aegon NV ADR or give up 4.12% of portfolio value over 90 days.

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

Aegon NV ADR  vs.  Axa Equitable Holdings

Aegon NV ADR

Risk-Adjusted Performance

Very Weak

Over the last 90 days Aegon NV ADR has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable technical and fundamental indicators, Aegon NV is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Axa Equitable Holdings

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Aegon NV and Axa Equitable

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

The idea behind Aegon NV ADR and Axa Equitable Holdings 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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.