Correlation Between American International and AXA SA
Can any of the company-specific risk be diversified away by investing in both American International 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 American International and AXA SA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American International Group and AXA SA, you can compare the effects of market volatilities on American International 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 American International with a short position of AXA SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of American International and AXA SA.
Diversification Opportunities for American International and AXA SA
-0.16 | Correlation Coefficient |
Good diversification
The 3 months correlation between American and AXA is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding American International Group and AXA SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AXA SA and American International 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 American International 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 American International i.e., American International and AXA SA go up and down completely randomly.
Pair Corralation between American International and AXA SA
Considering the 90-day investment horizon American International is expected to generate 3.82 times less return on investment than AXA SA. But when comparing it to its historical volatility, American International Group is 2.87 times less risky than AXA SA. It trades about 0.03 of its potential returns per unit of risk. AXA SA is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 2,519 in AXA SA on September 19, 2024 and sell it today you would earn a total of 1,044 from holding AXA SA or generate 41.45% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 91.53% |
| Values | Daily Returns |
American International Group vs. AXA SA
Performance |
| Timeline |
| American International |
| AXA SA |
American International and AXA SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American International and AXA SA
The main advantage of trading using opposite American International and AXA SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American International 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.| American International vs. Axa Equitable Holdings | American International vs. Arch Capital Group | American International vs. Old Republic International | American International vs. Sun Life Financial |
| AXA SA vs. Berkshire Hathaway | AXA SA vs. Berkshire Hathaway | AXA SA vs. Zurich Insurance Group | AXA SA vs. American International 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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