Correlation Between AXIS Capital and Prudential Financial
Can any of the company-specific risk be diversified away by investing in both AXIS Capital and Prudential 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 Prudential 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 Prudential Financial 5950, you can compare the effects of market volatilities on AXIS Capital and Prudential 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 Prudential Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of AXIS Capital and Prudential Financial.
Diversification Opportunities for AXIS Capital and Prudential Financial
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between AXIS and Prudential is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding AXIS Capital Holdings and Prudential Financial 5950 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Prudential Financial 5950 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 Prudential Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Prudential Financial 5950 has no effect on the direction of AXIS Capital i.e., AXIS Capital and Prudential Financial go up and down completely randomly.
Pair Corralation between AXIS Capital and Prudential Financial
Assuming the 90 days trading horizon AXIS Capital Holdings is expected to under-perform the Prudential Financial. In addition to that, AXIS Capital is 1.72 times more volatile than Prudential Financial 5950. It trades about -0.05 of its total potential returns per unit of risk. Prudential Financial 5950 is currently generating about -0.03 per unit of volatility. If you would invest 2,564 in Prudential Financial 5950 on November 1, 2024 and sell it today you would lose (37.00) from holding Prudential Financial 5950 or give up 1.44% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 98.33% |
| Values | Daily Returns |
AXIS Capital Holdings vs. Prudential Financial 5950
Performance |
| Timeline |
| AXIS Capital Holdings |
| Prudential Financial 5950 |
AXIS Capital and Prudential Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AXIS Capital and Prudential Financial
The main advantage of trading using opposite AXIS Capital and Prudential Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AXIS Capital position performs unexpectedly, Prudential 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 Prudential Financial will offset losses from the drop in Prudential 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 |
| Prudential Financial vs. Reinsurance Group of | Prudential Financial vs. ATT Inc | Prudential Financial vs. Affiliated Managers Group | Prudential Financial vs. Entergy New Orleans |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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