Correlation Between Tiptree and AXIS Capital
Can any of the company-specific risk be diversified away by investing in both Tiptree 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 Tiptree and AXIS Capital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Tiptree and AXIS Capital Holdings, you can compare the effects of market volatilities on Tiptree 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 Tiptree with a short position of AXIS Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tiptree and AXIS Capital.
Diversification Opportunities for Tiptree and AXIS Capital
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Tiptree and AXIS is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Tiptree 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 Tiptree 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 Tiptree 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 Tiptree i.e., Tiptree and AXIS Capital go up and down completely randomly.
Pair Corralation between Tiptree and AXIS Capital
Given the investment horizon of 90 days Tiptree is expected to generate 1.31 times less return on investment than AXIS Capital. In addition to that, Tiptree is 1.14 times more volatile than AXIS Capital Holdings. It trades about 0.36 of its total potential returns per unit of risk. AXIS Capital Holdings is currently generating about 0.53 per unit of volatility. If you would invest 7,904 in AXIS Capital Holdings on September 2, 2024 and sell it today you would earn a total of 1,400 from holding AXIS Capital Holdings or generate 17.71% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Tiptree vs. AXIS Capital Holdings
Performance |
| Timeline |
| Tiptree |
| AXIS Capital Holdings |
Tiptree and AXIS Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Tiptree and AXIS Capital
The main advantage of trading using opposite Tiptree and AXIS Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tiptree 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.The idea behind Tiptree and AXIS Capital Holdings 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.| AXIS Capital vs. Employers Holdings | AXIS Capital vs. AMERISAFE | AXIS Capital vs. NMI Holdings | AXIS Capital vs. Investors Title |
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 Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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