Correlation Between 2x Long and AXS 2X
Can any of the company-specific risk be diversified away by investing in both 2x Long and AXS 2X 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 2x Long and AXS 2X into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between 2x Long VIX and AXS 2X Innovation, you can compare the effects of market volatilities on 2x Long and AXS 2X 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 2x Long with a short position of AXS 2X. Check out your portfolio center. Please also check ongoing floating volatility patterns of 2x Long and AXS 2X.
Diversification Opportunities for 2x Long and AXS 2X
Excellent diversification
The 3 months correlation between UVIX and AXS is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding 2x Long VIX and AXS 2X Innovation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AXS 2X Innovation and 2x Long 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 2x Long VIX are associated (or correlated) with AXS 2X. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AXS 2X Innovation has no effect on the direction of 2x Long i.e., 2x Long and AXS 2X go up and down completely randomly.
Pair Corralation between 2x Long and AXS 2X
Given the investment horizon of 90 days 2x Long VIX is expected to under-perform the AXS 2X. But the etf apears to be less risky and, when comparing its historical volatility, 2x Long VIX is 1.78 times less risky than AXS 2X. The etf trades about -0.39 of its potential returns per unit of risk. The AXS 2X Innovation is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest 5,977 in AXS 2X Innovation on September 1, 2024 and sell it today you would lose (1,322) from holding AXS 2X Innovation or give up 22.12% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
2x Long VIX vs. AXS 2X Innovation
Performance |
| Timeline |
| 2x Long VIX |
| AXS 2X Innovation |
2x Long and AXS 2X Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with 2x Long and AXS 2X
The main advantage of trading using opposite 2x Long and AXS 2X positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if 2x Long position performs unexpectedly, AXS 2X 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 AXS 2X will offset losses from the drop in AXS 2X's long position.| 2x Long vs. 1x Short VIX | 2x Long vs. ProShares UltraShort Bloomberg | 2x Long vs. MicroSectors FANG Index | 2x Long vs. AXS TSLA Bear |
| AXS 2X vs. Tuttle Capital Short | AXS 2X vs. Direxion Shares ETF | AXS 2X vs. AXS TSLA Bear | AXS 2X vs. 2x Long VIX |
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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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