Correlation Between AXA SA and Assicurazioni Generali

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

By analyzing existing cross correlation between AXA SA and Assicurazioni Generali SpA, you can compare the effects of market volatilities on AXA SA and Assicurazioni Generali 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 SA with a short position of Assicurazioni Generali. Check out your portfolio center. Please also check ongoing floating volatility patterns of AXA SA and Assicurazioni Generali.

Diversification Opportunities for AXA SA and Assicurazioni Generali

0.66

Correlation Coefficient

AXA SA  Assicurazioni Generali

Poor diversification

The 3 months correlation between AXA and Assicurazioni is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding AXA SA and Assicurazioni Generali SpA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Assicurazioni Generali and AXA SA 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 SA are associated (or correlated) with Assicurazioni Generali. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Assicurazioni Generali has no effect on the direction of AXA SA i.e., AXA SA and Assicurazioni Generali go up and down completely randomly.

Pair Corralation between AXA SA and Assicurazioni Generali

Assuming the 90 days horizon AXA SA is expected to generate 1.21 times less return on investment than Assicurazioni Generali. In addition to that, AXA SA is 1.57 times more volatile than Assicurazioni Generali SpA. It trades about 0.12 of its total potential returns per unit of risk. Assicurazioni Generali SpA is currently generating about 0.23 per unit of volatility. If you would invest  1,427  in Assicurazioni Generali SpA on November 29, 2024 and sell it today you would earn a total of  222.00  from holding Assicurazioni Generali SpA or generate 15.56% return on investment over 90 days.

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

AXA SA  vs.  Assicurazioni Generali SpA

AXA SA

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in AXA SA are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak technical indicators, AXA SA reported solid returns over the last few months and may actually be approaching a breakup point.

Assicurazioni Generali

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Assicurazioni Generali SpA are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of fairly fragile technical and fundamental indicators, Assicurazioni Generali showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with AXA SA and Assicurazioni Generali

The main advantage of trading using opposite AXA SA and Assicurazioni Generali positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AXA SA position performs unexpectedly, Assicurazioni Generali 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 Assicurazioni Generali will offset losses from the drop in Assicurazioni Generali's long position.

The idea behind AXA SA and Assicurazioni Generali SpA 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.

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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.