Correlation Between Aegon NV and Koninklijke Philips

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

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

Diversification Opportunities for Aegon NV and Koninklijke Philips

0.39

Correlation Coefficient

Aegon NV  Koninklijke Philips

Weak diversification

The 3 months correlation between Aegon and Koninklijke is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Aegon NV and Koninklijke Philips NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Koninklijke Philips 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 Koninklijke Philips. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Koninklijke Philips has no effect on the direction of Aegon NV i.e., Aegon NV and Koninklijke Philips go up and down completely randomly.

Pair Corralation between Aegon NV and Koninklijke Philips

Assuming the 90 days trading horizon Aegon NV is expected to generate 1.15 times more return on investment than Koninklijke Philips. However, Aegon NV is 1.15 times more volatile than Koninklijke Philips NV. It trades about -0.01 of its potential returns per unit of risk. Koninklijke Philips NV is currently generating about -0.12 per unit of risk. If you would invest  598.00  in Aegon NV on March 22, 2025 and sell it today you would lose (14.00) from holding Aegon NV or give up 2.34% of portfolio value over 90 days.

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

Aegon NV  vs.  Koninklijke Philips NV

Aegon NV

Risk-Adjusted Performance

Very Weak

Over the last 90 days Aegon NV has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Aegon NV is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Koninklijke Philips

Risk-Adjusted Performance

Very Weak

Over the last 90 days Koninklijke Philips NV has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in July 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Aegon NV and Koninklijke Philips

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

The idea behind Aegon NV and Koninklijke Philips 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.