Correlation Between Axa SA and Citizens
Can any of the company-specific risk be diversified away by investing in both Axa SA and Citizens 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 Citizens 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 Citizens, you can compare the effects of market volatilities on Axa SA and Citizens 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 Citizens. Check out your portfolio center. Please also check ongoing floating volatility patterns of Axa SA and Citizens.
Diversification Opportunities for Axa SA and Citizens
Excellent diversification
The 3 months correlation between Axa and Citizens is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding Axa SA ADR and Citizens in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Citizens 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 Citizens. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Citizens has no effect on the direction of Axa SA i.e., Axa SA and Citizens go up and down completely randomly.
Pair Corralation between Axa SA and Citizens
Assuming the 90 days horizon Axa SA is expected to generate 1.48 times less return on investment than Citizens. But when comparing it to its historical volatility, Axa SA ADR is 2.44 times less risky than Citizens. It trades about 0.12 of its potential returns per unit of risk. Citizens is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 214.00 in Citizens on August 31, 2024 and sell it today you would earn a total of 234.00 from holding Citizens or generate 109.35% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 8.29% |
| Values | Daily Returns |
Axa SA ADR vs. Citizens
Performance |
| Timeline |
| Axa SA ADR |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Citizens |
Axa SA and Citizens Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Axa SA and Citizens
The main advantage of trading using opposite Axa SA and Citizens positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Axa SA position performs unexpectedly, Citizens 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 Citizens will offset losses from the drop in Citizens' long position.The idea behind Axa SA ADR and Citizens 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.| Citizens vs. Lincoln National | Citizens vs. Aflac Incorporated | Citizens vs. Unum Group | Citizens vs. Manulife Financial Corp |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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