Correlation Between American International and Axa Equitable
Can any of the company-specific risk be diversified away by investing in both American International and Axa Equitable 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 American International and Axa Equitable into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American International Group and Axa Equitable Holdings, you can compare the effects of market volatilities on American International and Axa Equitable 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 American International with a short position of Axa Equitable. Check out your portfolio center. Please also check ongoing floating volatility patterns of American International and Axa Equitable.
Diversification Opportunities for American International and Axa Equitable
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between American and Axa is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding American International Group and Axa Equitable Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Axa Equitable Holdings and American International 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 American International Group are associated (or correlated) with Axa Equitable. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Axa Equitable Holdings has no effect on the direction of American International i.e., American International and Axa Equitable go up and down completely randomly.
Pair Corralation between American International and Axa Equitable
Considering the 90-day investment horizon American International is expected to generate 1.23 times less return on investment than Axa Equitable. But when comparing it to its historical volatility, American International Group is 1.45 times less risky than Axa Equitable. It trades about 0.15 of its potential returns per unit of risk. Axa Equitable Holdings is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 2,710 in Axa Equitable Holdings on February 12, 2024 and sell it today you would earn a total of 1,274 from holding Axa Equitable Holdings or generate 47.01% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 99.52% |
| Values | Daily Returns |
American International Group vs. Axa Equitable Holdings
Performance |
| Timeline |
| American International |
| Axa Equitable Holdings |
American International and Axa Equitable Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American International and Axa Equitable
The main advantage of trading using opposite American International and Axa Equitable positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American International position performs unexpectedly, Axa Equitable 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 Equitable will offset losses from the drop in Axa Equitable's long position.| American International vs. Global Indemnity PLC | American International vs. Erie Indemnity | American International vs. National Western Life | American International vs. AMERISAFE |
| Axa Equitable vs. Global Indemnity PLC | Axa Equitable vs. Erie Indemnity | Axa Equitable vs. National Western Life | Axa Equitable vs. AMERISAFE |
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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