Correlation Between Aegon NV and Broadstone Net

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

Diversification Opportunities for Aegon NV and Broadstone Net

0.26

Correlation Coefficient

Aegon NV  Broadstone Net

Modest diversification

The 3 months correlation between Aegon and Broadstone is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Aegon NV ADR and Broadstone Net LeaseInc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Broadstone Net LeaseInc 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 Broadstone Net. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Broadstone Net LeaseInc has no effect on the direction of Aegon NV i.e., Aegon NV and Broadstone Net go up and down completely randomly.

Pair Corralation between Aegon NV and Broadstone Net

Considering the 90-day investment horizon Aegon NV ADR is expected to generate 0.9 times more return on investment than Broadstone Net. However, Aegon NV ADR is 1.11 times less risky than Broadstone Net. It trades about 0.18 of its potential returns per unit of risk. Broadstone Net LeaseInc is currently generating about 0.02 per unit of risk. If you would invest  567.00  in Aegon NV ADR on February 13, 2024 and sell it today you would earn a total of  96.00  from holding Aegon NV ADR or generate 16.93% return on investment over 90 days.

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

Aegon NV ADR  vs.  Broadstone Net LeaseInc

Aegon NV ADR

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Aegon NV ADR are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite nearly inconsistent technical and fundamental indicators, Aegon NV reported solid returns over the last few months and may actually be approaching a breakup point.

Broadstone Net LeaseInc

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Broadstone Net LeaseInc are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent basic indicators, Broadstone Net is not utilizing all of its potentials. The recent stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Aegon NV and Broadstone Net

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

The idea behind Aegon NV ADR and Broadstone Net LeaseInc 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.