Correlation Between Axa SA and International General
Can any of the company-specific risk be diversified away by investing in both Axa SA and International General 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 International General 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 International General Insurance, you can compare the effects of market volatilities on Axa SA and International General 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 International General. Check out your portfolio center. Please also check ongoing floating volatility patterns of Axa SA and International General.
Diversification Opportunities for Axa SA and International General
-0.48 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Axa and International is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding Axa SA ADR and International General Insuranc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on International General 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 International General. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of International General has no effect on the direction of Axa SA i.e., Axa SA and International General go up and down completely randomly.
Pair Corralation between Axa SA and International General
Assuming the 90 days horizon Axa SA ADR is expected to generate 0.37 times more return on investment than International General. However, Axa SA ADR is 2.68 times less risky than International General. It trades about 0.12 of its potential returns per unit of risk. International General Insurance is currently generating about -0.11 per unit of risk. If you would invest 2,930 in Axa SA ADR on August 31, 2024 and sell it today you would earn a total of 158.00 from holding Axa SA ADR or generate 5.39% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 93.55% |
| Values | Daily Returns |
Axa SA ADR vs. International General Insuranc
Performance |
| Timeline |
| Axa SA ADR |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| International General |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Axa SA and International General Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Axa SA and International General
The main advantage of trading using opposite Axa SA and International General positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Axa SA position performs unexpectedly, International General 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 International General will offset losses from the drop in International General's long position.The idea behind Axa SA ADR and International General Insurance 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.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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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