Correlation Between AXIS Capital and Radian
Can any of the company-specific risk be diversified away by investing in both AXIS Capital and Radian 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 Radian 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 Radian Group, you can compare the effects of market volatilities on AXIS Capital and Radian 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 Radian. Check out your portfolio center. Please also check ongoing floating volatility patterns of AXIS Capital and Radian.
Diversification Opportunities for AXIS Capital and Radian
0.34 | Correlation Coefficient |
Weak diversification
The 3 months correlation between AXIS and Radian is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding AXIS Capital Holdings and Radian Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Radian Group 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 Radian. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Radian Group has no effect on the direction of AXIS Capital i.e., AXIS Capital and Radian go up and down completely randomly.
Pair Corralation between AXIS Capital and Radian
Considering the 90-day investment horizon AXIS Capital Holdings is expected to generate 0.85 times more return on investment than Radian. However, AXIS Capital Holdings is 1.18 times less risky than Radian. It trades about 0.16 of its potential returns per unit of risk. Radian Group is currently generating about 0.05 per unit of risk. If you would invest 5,299 in AXIS Capital Holdings on November 9, 2024 and sell it today you would earn a total of 4,120 from holding AXIS Capital Holdings or generate 77.75% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
AXIS Capital Holdings vs. Radian Group
Performance |
| Timeline |
| AXIS Capital Holdings |
| Radian Group |
AXIS Capital and Radian Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AXIS Capital and Radian
The main advantage of trading using opposite AXIS Capital and Radian positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AXIS Capital position performs unexpectedly, Radian 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 Radian will offset losses from the drop in Radian's long position.| AXIS Capital vs. Assured Guaranty | AXIS Capital vs. Enact Holdings | AXIS Capital vs. NMI Holdings | AXIS Capital vs. Radian Group |
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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