Correlation Between Microsoft and Aegon NV

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

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

Diversification Opportunities for Microsoft and Aegon NV

0.0

Correlation Coefficient

Microsoft  Aegon NV

Pay attention - limited upside

The 3 months correlation between Microsoft and Aegon is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and Aegon NV PERP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aegon NV PERP and Microsoft 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 Microsoft 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 PERP has no effect on the direction of Microsoft i.e., Microsoft and Aegon NV go up and down completely randomly.

Pair Corralation between Microsoft and Aegon NV

If you would invest  37,145  in Microsoft on September 3, 2024 and sell it today you would earn a total of  5,953  from holding Microsoft or generate 16.03% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Microsoft  vs.  Aegon NV PERP

Microsoft

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Microsoft are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable technical and fundamental indicators, Microsoft is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Aegon NV PERP

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Microsoft and Aegon NV

The main advantage of trading using opposite Microsoft and Aegon NV positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft 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 Microsoft and Aegon NV PERP 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.