Correlation Between Assurant and AXIS Capital

Can any of the company-specific risk be diversified away by investing in both Assurant 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 Assurant and AXIS Capital into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Assurant and AXIS Capital Holdings, you can compare the effects of market volatilities on Assurant 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 Assurant with a short position of AXIS Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Assurant and AXIS Capital.

Diversification Opportunities for Assurant and AXIS Capital

0.32

Correlation Coefficient

Assurant  AXIS Capital

Weak diversification

The 3 months correlation between Assurant and AXIS is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Assurant 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 Assurant 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 Assurant 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 Assurant i.e., Assurant and AXIS Capital go up and down completely randomly.

Pair Corralation between Assurant and AXIS Capital

Considering the 90-day investment horizon Assurant is expected to generate 2.02 times more return on investment than AXIS Capital. However, Assurant is 2.02 times more volatile than AXIS Capital Holdings. It trades about 0.15 of its potential returns per unit of risk. AXIS Capital Holdings is currently generating about 0.04 per unit of risk. If you would invest  19,063  in Assurant on September 12, 2024 and sell it today you would earn a total of  2,568  from holding Assurant or generate 13.47% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Assurant  vs.  AXIS Capital Holdings

Assurant

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Assurant are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating forward indicators, Assurant showed solid returns over the last few months and may actually be approaching a breakup point.

AXIS Capital Holdings

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in AXIS Capital Holdings are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, AXIS Capital is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Assurant and AXIS Capital

The main advantage of trading using opposite Assurant and AXIS Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Assurant 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 Assurant 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.

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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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..