Correlation Between Aegon NV and ING Groep

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

By analyzing existing cross correlation between Aegon NV and ING Groep NV, you can compare the effects of market volatilities on Aegon NV and ING Groep 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 ING Groep. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aegon NV and ING Groep.

Diversification Opportunities for Aegon NV and ING Groep

-0.73

Correlation Coefficient

Aegon NV  ING Groep

Pay attention - limited upside

The 3 months correlation between Aegon and ING is -0.73. Overlapping area represents the amount of risk that can be diversified away by holding Aegon NV and ING Groep NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ING Groep NV 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 are associated (or correlated) with ING Groep. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ING Groep NV has no effect on the direction of Aegon NV i.e., Aegon NV and ING Groep go up and down completely randomly.

Pair Corralation between Aegon NV and ING Groep

Assuming the 90 days trading horizon Aegon NV is expected to generate 1.2 times less return on investment than ING Groep. In addition to that, Aegon NV is 1.01 times more volatile than ING Groep NV. It trades about 0.06 of its total potential returns per unit of risk. ING Groep NV is currently generating about 0.07 per unit of volatility. If you would invest  1,227  in ING Groep NV on August 28, 2024 and sell it today you would earn a total of  237.00  from holding ING Groep NV or generate 19.32% return on investment over 90 days.

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

Aegon NV  vs.  ING Groep NV

Aegon NV

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Aegon NV are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Aegon NV may actually be approaching a critical reversion point that can send shares even higher in December 2024.

ING Groep NV

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ING Groep NV has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with Aegon NV and ING Groep

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

The idea behind Aegon NV and ING Groep NV 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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.