Correlation Between Axa Equitable and Arch Capital
Can any of the company-specific risk be diversified away by investing in both Axa Equitable and Arch 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 Axa Equitable and Arch Capital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Axa Equitable Holdings and Arch Capital Group, you can compare the effects of market volatilities on Axa Equitable and Arch 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 Axa Equitable with a short position of Arch Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Axa Equitable and Arch Capital.
Diversification Opportunities for Axa Equitable and Arch Capital
-0.69 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Axa and Arch is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding Axa Equitable Holdings and Arch Capital Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Arch Capital Group and Axa Equitable 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 Equitable Holdings are associated (or correlated) with Arch Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Arch Capital Group has no effect on the direction of Axa Equitable i.e., Axa Equitable and Arch Capital go up and down completely randomly.
Pair Corralation between Axa Equitable and Arch Capital
Considering the 90-day investment horizon Axa Equitable Holdings is expected to generate 1.47 times more return on investment than Arch Capital. However, Axa Equitable is 1.47 times more volatile than Arch Capital Group. It trades about 0.06 of its potential returns per unit of risk. Arch Capital Group is currently generating about -0.05 per unit of risk. If you would invest 4,544 in Axa Equitable Holdings on August 24, 2024 and sell it today you would earn a total of 136.00 from holding Axa Equitable Holdings or generate 2.99% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Axa Equitable Holdings vs. Arch Capital Group
Performance |
| Timeline |
| Axa Equitable Holdings |
| Arch Capital Group |
Axa Equitable and Arch Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Axa Equitable and Arch Capital
The main advantage of trading using opposite Axa Equitable and Arch Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Axa Equitable position performs unexpectedly, Arch 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 Arch Capital will offset losses from the drop in Arch Capital's long position.| Axa Equitable vs. American International Group | Axa Equitable vs. Arch Capital Group | Axa Equitable vs. Old Republic International | Axa Equitable vs. Sun Life Financial |
| Arch Capital vs. Axa Equitable Holdings | Arch Capital vs. American International Group | Arch Capital vs. Old Republic International | Arch Capital vs. Sun Life Financial |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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