Correlation Between Axa SA and Brighthouse Financial
Can any of the company-specific risk be diversified away by investing in both Axa SA and Brighthouse Financial 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 Axa SA and Brighthouse Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Axa SA ADR and Brighthouse Financial, you can compare the effects of market volatilities on Axa SA and Brighthouse Financial 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 Axa SA with a short position of Brighthouse Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Axa SA and Brighthouse Financial.
Diversification Opportunities for Axa SA and Brighthouse Financial
-0.58 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Axa and Brighthouse is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding Axa SA ADR and Brighthouse Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Brighthouse Financial and Axa SA 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 Axa SA ADR are associated (or correlated) with Brighthouse Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Brighthouse Financial has no effect on the direction of Axa SA i.e., Axa SA and Brighthouse Financial go up and down completely randomly.
Pair Corralation between Axa SA and Brighthouse Financial
If you would invest 1,819 in Brighthouse Financial on August 27, 2024 and sell it today you would earn a total of 125.00 from holding Brighthouse Financial or generate 6.87% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 0.53% |
| Values | Daily Returns |
Axa SA ADR vs. Brighthouse Financial
Performance |
| Timeline |
| Axa SA ADR |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Brighthouse Financial |
Axa SA and Brighthouse Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Axa SA and Brighthouse Financial
The main advantage of trading using opposite Axa SA and Brighthouse Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Axa SA position performs unexpectedly, Brighthouse Financial 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 Brighthouse Financial will offset losses from the drop in Brighthouse Financial's long position.The idea behind Axa SA ADR and Brighthouse Financial 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.| Brighthouse Financial vs. Brighthouse Financial | Brighthouse Financial vs. Brighthouse Financial | Brighthouse Financial vs. Morgan Stanley |
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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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