Correlation Between Joby Aviation and Aegon NV

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

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

Diversification Opportunities for Joby Aviation and Aegon NV

-0.47

Correlation Coefficient

Joby Aviation  Aegon NV

Very good diversification

The 3 months correlation between Joby and Aegon is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding Joby Aviation 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 Joby Aviation 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 Joby Aviation 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 Joby Aviation i.e., Joby Aviation and Aegon NV go up and down completely randomly.

Pair Corralation between Joby Aviation and Aegon NV

Given the investment horizon of 90 days Joby Aviation is expected to generate 2.2 times more return on investment than Aegon NV. However, Joby Aviation is 2.2 times more volatile than Aegon NV ADR. It trades about 0.02 of its potential returns per unit of risk. Aegon NV ADR is currently generating about 0.04 per unit of risk. If you would invest  549.00  in Joby Aviation on February 4, 2024 and sell it today you would lose (11.00) from holding Joby Aviation or give up 2.0% of portfolio value over 90 days.

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

Joby Aviation  vs.  Aegon NV ADR

Joby Aviation

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Joby Aviation has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong fundamental drivers, Joby Aviation is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Aegon NV ADR

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Aegon NV ADR are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile technical and fundamental indicators, Aegon NV may actually be approaching a critical reversion point that can send shares even higher in June 2024.

Pair Trading with Joby Aviation and Aegon NV

The main advantage of trading using opposite Joby Aviation and Aegon NV positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Joby Aviation 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 Joby Aviation and Aegon NV ADR 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.