Correlation Between International General and Axa SA
Can any of the company-specific risk be diversified away by investing in both International General and Axa 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 International General and Axa SA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between International General Insurance and Axa SA ADR, you can compare the effects of market volatilities on International General and Axa 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 International General with a short position of Axa SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of International General and Axa SA.
Diversification Opportunities for International General and Axa SA
-0.48 | Correlation Coefficient |
Very good diversification
The 3 months correlation between International and Axa is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding International General Insuranc and Axa SA ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Axa SA ADR and International General 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 International General Insurance are associated (or correlated) with Axa SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Axa SA ADR has no effect on the direction of International General i.e., International General and Axa SA go up and down completely randomly.
Pair Corralation between International General and Axa SA
Assuming the 90 days horizon International General Insurance is expected to under-perform the Axa SA. In addition to that, International General is 2.68 times more volatile than Axa SA ADR. It trades about -0.11 of its total potential returns per unit of risk. Axa SA ADR is currently generating about 0.12 per unit of volatility. If you would invest 2,930 in Axa SA ADR on August 31, 2024 and sell it today you would earn a total of 158.00 from holding Axa SA ADR or generate 5.39% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 93.55% |
| Values | Daily Returns |
International General Insuranc vs. Axa SA ADR
Performance |
| Timeline |
| International General |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Axa SA ADR |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
International General and Axa SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with International General and Axa SA
The main advantage of trading using opposite International General and Axa SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if International General position performs unexpectedly, Axa 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 Axa SA will offset losses from the drop in Axa SA's long position.The idea behind International General Insurance and Axa SA ADR pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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