Correlation Between AXA SA and Sanofi SA
Can any of the company-specific risk be diversified away by investing in both AXA SA and Sanofi SA 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 AXA SA and Sanofi SA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AXA SA and Sanofi SA, you can compare the effects of market volatilities on AXA SA and Sanofi SA 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 AXA SA with a short position of Sanofi SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of AXA SA and Sanofi SA.
Diversification Opportunities for AXA SA and Sanofi SA
Very weak diversification
The 3 months correlation between AXA and Sanofi is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding AXA SA and Sanofi SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sanofi SA and AXA SA 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 AXA SA are associated (or correlated) with Sanofi SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sanofi SA has no effect on the direction of AXA SA i.e., AXA SA and Sanofi SA go up and down completely randomly.
Pair Corralation between AXA SA and Sanofi SA
Assuming the 90 days horizon AXA SA is expected to generate 0.85 times more return on investment than Sanofi SA. However, AXA SA is 1.17 times less risky than Sanofi SA. It trades about -0.11 of its potential returns per unit of risk. Sanofi SA is currently generating about -0.3 per unit of risk. If you would invest 3,511 in AXA SA on August 24, 2024 and sell it today you would lose (91.00) from holding AXA SA or give up 2.59% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
AXA SA vs. Sanofi SA
Performance |
| Timeline |
| AXA SA |
| Sanofi SA |
AXA SA and Sanofi SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AXA SA and Sanofi SA
The main advantage of trading using opposite AXA SA and Sanofi SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AXA SA position performs unexpectedly, Sanofi SA 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 Sanofi SA will offset losses from the drop in Sanofi SA's long position.| AXA SA vs. BNP Paribas SA | AXA SA vs. Sanofi SA | AXA SA vs. Credit Agricole SA | AXA SA vs. Societe Generale SA |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
Other Complementary Tools
| Correlation Analysis Reduce portfolio risk simply by holding instruments which are not perfectly correlated | |
| Bonds Directory Find actively traded corporate debentures issued by US companies | |
| Stock Screener Find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook. | |
| Watchlist Optimization Optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm | |
| Portfolio File Import Quickly import all of your third-party portfolios from your local drive in csv format |