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
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Arch and AXA is 0.72. 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
Assuming the 90 days horizon Arch Capital Group is expected to generate 0.57 times more return on investment than AXA SA. However, Arch Capital Group is 1.77 times less risky than AXA SA. It trades about -0.19 of its potential returns per unit of risk. AXA SA is currently generating about -0.19 per unit of risk. If you would invest 2,357 in Arch Capital Group on August 28, 2024 and sell it today you would lose (70.00) from holding Arch Capital Group or give up 2.97% 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. Athene Holding | Arch Capital vs. The Hartford Financial | Arch Capital vs. Arch Capital Group | Arch Capital vs. Athene Holding |
| AXA SA vs. Assicurazioni Generali SpA | AXA SA vs. Athene Holding | AXA SA vs. Athene Holding | AXA SA vs. Arch Capital 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
Other Complementary Tools
| Portfolio Diagnostics Use generated alerts and portfolio events aggregator to diagnose current holdings | |
| Pattern Recognition Use different Pattern Recognition models to time the market across multiple global exchanges | |
| Performance Analysis Check effects of mean-variance optimization against your current asset allocation | |
| Portfolio Suggestion Get suggestions outside of your existing asset allocation including your own model portfolios | |
| Top Crypto Exchanges Search and analyze digital assets across top global cryptocurrency exchanges |