Correlation Between AXA World and Caixabank Seleccin

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Can any of the company-specific risk be diversified away by investing in both AXA World and Caixabank Seleccin 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 AXA World and Caixabank Seleccin into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AXA World Funds and Caixabank Seleccin Tendencias, you can compare the effects of market volatilities on AXA World and Caixabank Seleccin 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 AXA World with a short position of Caixabank Seleccin. Check out your portfolio center. Please also check ongoing floating volatility patterns of AXA World and Caixabank Seleccin.

Diversification Opportunities for AXA World and Caixabank Seleccin

-0.11
  Correlation Coefficient

Good diversification

The 3 months correlation between AXA and Caixabank is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding AXA World Funds and Caixabank Seleccin Tendencias in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Caixabank Seleccin and AXA World 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 AXA World Funds are associated (or correlated) with Caixabank Seleccin. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Caixabank Seleccin has no effect on the direction of AXA World i.e., AXA World and Caixabank Seleccin go up and down completely randomly.

Pair Corralation between AXA World and Caixabank Seleccin

Assuming the 90 days trading horizon AXA World Funds is expected to generate 0.82 times more return on investment than Caixabank Seleccin. However, AXA World Funds is 1.21 times less risky than Caixabank Seleccin. It trades about -0.27 of its potential returns per unit of risk. Caixabank Seleccin Tendencias is currently generating about -0.34 per unit of risk. If you would invest  21,119  in AXA World Funds on October 5, 2024 and sell it today you would lose (486.00) from holding AXA World Funds or give up 2.3% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy94.12%
ValuesDaily Returns

AXA World Funds  vs.  Caixabank Seleccin Tendencias

 Performance 
       Timeline  
AXA World Funds 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days AXA World Funds has generated negative risk-adjusted returns adding no value to fund investors. Despite nearly stable basic indicators, AXA World is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.
Caixabank Seleccin 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
OK
Over the last 90 days Caixabank Seleccin Tendencias has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Caixabank Seleccin is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

AXA World and Caixabank Seleccin Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with AXA World and Caixabank Seleccin

The main advantage of trading using opposite AXA World and Caixabank Seleccin positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AXA World position performs unexpectedly, Caixabank Seleccin 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 Caixabank Seleccin will offset losses from the drop in Caixabank Seleccin's long position.
The idea behind AXA World Funds and Caixabank Seleccin Tendencias 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.

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