Can any of the company-specific risk be diversified away by investing in both Welsbach Technology 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 Welsbach Technology and Aegon NV into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Welsbach Technology Metals and Aegon NV ADR, you can compare the effects of market volatilities on Welsbach Technology 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 Welsbach Technology with a short position of Aegon NV. Check out your portfolio center. Please also check ongoing floating volatility patterns of Welsbach Technology and Aegon NV.
Diversification Opportunities for Welsbach Technology and Aegon NV
The 3 months correlation between Welsbach and Aegon is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Welsbach Technology Metals 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 Welsbach Technology 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 Welsbach Technology Metals 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 Welsbach Technology i.e., Welsbach Technology and Aegon NV go up and down completely randomly.
Pair Corralation between Welsbach Technology and Aegon NV
Given the investment horizon of 90 days Welsbach Technology is expected to generate 3.99 times less return on investment than Aegon NV. But when comparing it to its historical volatility, Welsbach Technology Metals is 4.08 times less risky than Aegon NV. It trades about 0.05 of its potential returns per unit of risk. Aegon NV ADR is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 437.00 in Aegon NV ADR on March 6, 2024 and sell it today you would earn a total of 211.00 from holding Aegon NV ADR or generate 48.28% return on investment over 90 days.
Compared to the overall equity markets, risk-adjusted returns on investments in Welsbach Technology Metals are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong primary indicators, Welsbach Technology is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.
Compared to the overall equity markets, risk-adjusted returns on investments in Aegon NV ADR are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite nearly unfluctuating technical and fundamental indicators, Aegon NV may actually be approaching a critical reversion point that can send shares even higher in July 2024.