Correlation Between Arch Capital and AXA SA
Can any of the company-specific risk be diversified away by investing in both Arch Capital and AXA SA 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 Arch Capital and AXA SA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Arch Capital Group and AXA SA, you can compare the effects of market volatilities on Arch Capital and AXA SA 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 Arch Capital with a short position of AXA SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Arch Capital and AXA SA.
Diversification Opportunities for Arch Capital and AXA SA
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Arch and AXA is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Arch Capital Group and AXA SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AXA SA and Arch Capital 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 Arch Capital Group are associated (or correlated) with AXA SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AXA SA has no effect on the direction of Arch Capital i.e., Arch Capital and AXA SA go up and down completely randomly.
Pair Corralation between Arch Capital and AXA SA
Given the investment horizon of 90 days Arch Capital Group is expected to under-perform the AXA SA. But the stock apears to be less risky and, when comparing its historical volatility, Arch Capital Group is 1.51 times less risky than AXA SA. The stock trades about -0.25 of its potential returns per unit of risk. The AXA SA is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest 3,592 in AXA SA on September 19, 2024 and sell it today you would lose (29.00) from holding AXA SA or give up 0.81% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Arch Capital Group vs. AXA SA
Performance |
| Timeline |
| Arch Capital Group |
| AXA SA |
Arch Capital and AXA SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Arch Capital and AXA SA
The main advantage of trading using opposite Arch Capital and AXA SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Arch Capital position performs unexpectedly, AXA SA 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 AXA SA will offset losses from the drop in AXA SA's long position.| Arch Capital vs. Enstar Group Limited | Arch Capital vs. Aegon NV ADR | Arch Capital vs. American International Group | Arch Capital vs. Axa Equitable Holdings |
| AXA SA vs. Berkshire Hathaway | AXA SA vs. Berkshire Hathaway | AXA SA vs. Zurich Insurance Group | AXA SA vs. Zurich Insurance Group |
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
Other Complementary Tools
| Equity Valuation Check real value of public entities based on technical and fundamental data | |
| Fundamentals Comparison Compare fundamentals across multiple equities to find investing opportunities | |
| Bollinger Bands Use Bollinger Bands indicator to analyze target price for a given investing horizon | |
| Commodity Directory Find actively traded commodities issued by global exchanges | |
| Portfolio Backtesting Avoid under-diversification and over-optimization by backtesting your portfolios |