Correlation Between Broadstone Net and Aegon NV

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

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

Diversification Opportunities for Broadstone Net and Aegon NV

0.2

Correlation Coefficient

Broadstone Net  Aegon NV

Modest diversification

The 3 months correlation between Broadstone and Aegon is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Broadstone Net LeaseInc and Aegon NV ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aegon NV ADR and Broadstone Net 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 Broadstone Net LeaseInc 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 ADR has no effect on the direction of Broadstone Net i.e., Broadstone Net and Aegon NV go up and down completely randomly.

Pair Corralation between Broadstone Net and Aegon NV

Considering the 90-day investment horizon Broadstone Net LeaseInc is expected to under-perform the Aegon NV. But the stock apears to be less risky and, when comparing its historical volatility, Broadstone Net LeaseInc is 1.19 times less risky than Aegon NV. The stock trades about -0.01 of its potential returns per unit of risk. The Aegon NV ADR is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  483.00  in Aegon NV ADR on February 13, 2024 and sell it today you would earn a total of  179.00  from holding Aegon NV ADR or generate 37.06% return on investment over 90 days.

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

Broadstone Net LeaseInc  vs.  Aegon NV ADR

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 current stock price mess, may contribute to short-term losses for the institutional investors.

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 fragile technical and fundamental indicators, Aegon NV reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Broadstone Net and Aegon NV

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

Check out your portfolio center.

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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.