Correlation Between Arch Capital and Axa Equitable
Can any of the company-specific risk be diversified away by investing in both Arch Capital and Axa Equitable 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 Equitable 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 Equitable Holdings, you can compare the effects of market volatilities on Arch Capital and Axa Equitable 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 Equitable. Check out your portfolio center. Please also check ongoing floating volatility patterns of Arch Capital and Axa Equitable.
Diversification Opportunities for Arch Capital and Axa Equitable
-0.69 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Arch and Axa is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding Arch Capital Group and Axa Equitable Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Axa Equitable Holdings 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 Equitable. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Axa Equitable Holdings has no effect on the direction of Arch Capital i.e., Arch Capital and Axa Equitable go up and down completely randomly.
Pair Corralation between Arch Capital and Axa Equitable
Given the investment horizon of 90 days Arch Capital Group is expected to under-perform the Axa Equitable. But the stock apears to be less risky and, when comparing its historical volatility, Arch Capital Group is 1.47 times less risky than Axa Equitable. The stock trades about -0.05 of its potential returns per unit of risk. The Axa Equitable Holdings is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 4,544 in Axa Equitable Holdings on August 24, 2024 and sell it today you would earn a total of 136.00 from holding Axa Equitable Holdings or generate 2.99% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Arch Capital Group vs. Axa Equitable Holdings
Performance |
| Timeline |
| Arch Capital Group |
| Axa Equitable Holdings |
Arch Capital and Axa Equitable Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Arch Capital and Axa Equitable
The main advantage of trading using opposite Arch Capital and Axa Equitable positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Arch Capital position performs unexpectedly, Axa Equitable 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 Equitable will offset losses from the drop in Axa Equitable's long position.| Arch Capital vs. Axa Equitable Holdings | Arch Capital vs. American International Group | Arch Capital vs. Old Republic International | Arch Capital vs. Sun Life Financial |
| Axa Equitable vs. American International Group | Axa Equitable vs. Arch Capital Group | Axa Equitable vs. Old Republic International | Axa Equitable vs. Sun Life Financial |
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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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