Correlation Between Brown Brown and AXIS Capital
Can any of the company-specific risk be diversified away by investing in both Brown Brown and AXIS Capital 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 Brown Brown and AXIS Capital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Brown Brown and AXIS Capital Holdings, you can compare the effects of market volatilities on Brown Brown and AXIS Capital 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 Brown Brown with a short position of AXIS Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Brown Brown and AXIS Capital.
Diversification Opportunities for Brown Brown and AXIS Capital
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Brown and AXIS is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Brown Brown and AXIS Capital Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AXIS Capital Holdings and Brown Brown 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 Brown Brown are associated (or correlated) with AXIS Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AXIS Capital Holdings has no effect on the direction of Brown Brown i.e., Brown Brown and AXIS Capital go up and down completely randomly.
Pair Corralation between Brown Brown and AXIS Capital
Considering the 90-day investment horizon Brown Brown is expected to generate 0.81 times more return on investment than AXIS Capital. However, Brown Brown is 1.24 times less risky than AXIS Capital. It trades about 0.13 of its potential returns per unit of risk. AXIS Capital Holdings is currently generating about 0.07 per unit of risk. If you would invest 5,766 in Brown Brown on September 1, 2024 and sell it today you would earn a total of 5,544 from holding Brown Brown or generate 96.15% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Brown Brown vs. AXIS Capital Holdings
Performance |
| Timeline |
| Brown Brown |
| AXIS Capital Holdings |
Brown Brown and AXIS Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Brown Brown and AXIS Capital
The main advantage of trading using opposite Brown Brown and AXIS Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Brown Brown position performs unexpectedly, AXIS Capital 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 AXIS Capital will offset losses from the drop in AXIS Capital's long position.| Brown Brown vs. Marsh McLennan Companies | Brown Brown vs. Aon PLC | Brown Brown vs. Willis Towers Watson | Brown Brown vs. Erie Indemnity |
| 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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