Correlation Between Old Republic and Ageas SA/NV

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

By analyzing existing cross correlation between Old Republic International and ageas SANV, you can compare the effects of market volatilities on Old Republic and Ageas SA/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 Old Republic with a short position of Ageas SA/NV. Check out your portfolio center. Please also check ongoing floating volatility patterns of Old Republic and Ageas SA/NV.

Diversification Opportunities for Old Republic and Ageas SA/NV

0.87

Correlation Coefficient

Old Republic  Ageas SA/NV

Very poor diversification

The 3 months correlation between Old and Ageas is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Old Republic International and ageas SANV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ageas SA/NV and Old Republic 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 Old Republic International are associated (or correlated) with Ageas SA/NV. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ageas SA/NV has no effect on the direction of Old Republic i.e., Old Republic and Ageas SA/NV go up and down completely randomly.

Pair Corralation between Old Republic and Ageas SA/NV

Considering the 90-day investment horizon Old Republic International is expected to under-perform the Ageas SA/NV. But the stock apears to be less risky and, when comparing its historical volatility, Old Republic International is 1.37 times less risky than Ageas SA/NV. The stock trades about -0.03 of its potential returns per unit of risk. The ageas SANV is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  4,690  in ageas SANV on March 10, 2024 and sell it today you would earn a total of  41.00  from holding ageas SANV or generate 0.87% return on investment over 90 days.

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

Old Republic International  vs.  ageas SANV

Old Republic Interna

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Old Republic International are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong basic indicators, Old Republic is not utilizing all of its potentials. The recent stock price confusion, may contribute to short-horizon losses for the traders.

Ageas SA/NV

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in ageas SANV are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Ageas SA/NV showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Old Republic and Ageas SA/NV

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

The idea behind Old Republic International and ageas SANV 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 Global Correlations module to find global opportunities by holding instruments from different markets.