Correlation Between AXIS Capital and Hippo Holdings
Can any of the company-specific risk be diversified away by investing in both AXIS Capital and Hippo Holdings 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 Hippo Holdings 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 Hippo Holdings, you can compare the effects of market volatilities on AXIS Capital and Hippo Holdings 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 Hippo Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of AXIS Capital and Hippo Holdings.
Diversification Opportunities for AXIS Capital and Hippo Holdings
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between AXIS and Hippo is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding AXIS Capital Holdings and Hippo Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hippo Holdings 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 Hippo Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hippo Holdings has no effect on the direction of AXIS Capital i.e., AXIS Capital and Hippo Holdings go up and down completely randomly.
Pair Corralation between AXIS Capital and Hippo Holdings
Considering the 90-day investment horizon AXIS Capital is expected to generate 2.38 times less return on investment than Hippo Holdings. But when comparing it to its historical volatility, AXIS Capital Holdings is 3.38 times less risky than Hippo Holdings. It trades about 0.07 of its potential returns per unit of risk. Hippo Holdings is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 1,831 in Hippo Holdings on August 27, 2024 and sell it today you would earn a total of 1,570 from holding Hippo Holdings or generate 85.75% 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. Hippo Holdings
Performance |
| Timeline |
| AXIS Capital Holdings |
| Hippo Holdings |
AXIS Capital and Hippo Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AXIS Capital and Hippo Holdings
The main advantage of trading using opposite AXIS Capital and Hippo Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AXIS Capital position performs unexpectedly, Hippo Holdings 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 Hippo Holdings will offset losses from the drop in Hippo Holdings' long position.| AXIS Capital vs. Assured Guaranty | AXIS Capital vs. Enact Holdings | AXIS Capital vs. NMI Holdings | AXIS Capital vs. Radian Group |
| Hippo Holdings vs. ICC Holdings | Hippo Holdings vs. Employers Holdings | Hippo Holdings vs. AMERISAFE | Hippo Holdings vs. NMI Holdings |
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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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