Correlation Between AXIS Capital and American Financial
Can any of the company-specific risk be diversified away by investing in both AXIS Capital and American 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 AXIS Capital and American Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AXIS Capital Holdings and American Financial Group, you can compare the effects of market volatilities on AXIS Capital and American 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 AXIS Capital with a short position of American Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of AXIS Capital and American Financial.
Diversification Opportunities for AXIS Capital and American Financial
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between AXIS and American is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding AXIS Capital Holdings and American Financial Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Financial and AXIS 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 AXIS Capital Holdings are associated (or correlated) with American Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Financial has no effect on the direction of AXIS Capital i.e., AXIS Capital and American Financial go up and down completely randomly.
Pair Corralation between AXIS Capital and American Financial
Assuming the 90 days trading horizon AXIS Capital Holdings is expected to generate 1.19 times more return on investment than American Financial. However, AXIS Capital is 1.19 times more volatile than American Financial Group. It trades about 0.1 of its potential returns per unit of risk. American Financial Group is currently generating about -0.08 per unit of risk. If you would invest 2,240 in AXIS Capital Holdings on August 25, 2024 and sell it today you would earn a total of 32.00 from holding AXIS Capital Holdings or generate 1.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
AXIS Capital Holdings vs. American Financial Group
Performance |
| Timeline |
| AXIS Capital Holdings |
| American Financial |
AXIS Capital and American Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AXIS Capital and American Financial
The main advantage of trading using opposite AXIS Capital and American Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AXIS Capital position performs unexpectedly, American 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 American Financial will offset losses from the drop in American Financial's long position.| AXIS Capital vs. Ambac Financial Group | AXIS Capital vs. Employers Holdings | AXIS Capital vs. James River Group | AXIS Capital vs. Assured Guaranty |
| American Financial vs. American Financial Group | American Financial vs. American Financial Group | American Financial vs. Aegon Funding | American Financial vs. CMS Energy 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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