Correlation Between AXA SA and Swiss Life

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

By analyzing existing cross correlation between AXA SA and Swiss Life Holding, you can compare the effects of market volatilities on AXA SA and Swiss Life 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 Swiss Life. Check out your portfolio center. Please also check ongoing floating volatility patterns of AXA SA and Swiss Life.

Diversification Opportunities for AXA SA and Swiss Life

0.9

Correlation Coefficient

AXA SA  Swiss Life

Almost no diversification

The 3 months correlation between AXA and Swiss is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding AXA SA and Swiss Life Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Swiss Life Holding 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 Swiss Life. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Swiss Life Holding has no effect on the direction of AXA SA i.e., AXA SA and Swiss Life go up and down completely randomly.

Pair Corralation between AXA SA and Swiss Life

Assuming the 90 days horizon AXA SA is expected to generate 1.02 times more return on investment than Swiss Life. However, AXA SA is 1.02 times more volatile than Swiss Life Holding. It trades about 0.2 of its potential returns per unit of risk. Swiss Life Holding is currently generating about 0.13 per unit of risk. If you would invest  3,548  in AXA SA on December 25, 2024 and sell it today you would earn a total of  750.00  from holding AXA SA or generate 21.14% return on investment over 90 days.

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

AXA SA  vs.  Swiss Life Holding

AXA SA

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in AXA SA are ranked lower than 15 (%) 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.

Swiss Life Holding

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Swiss Life Holding are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak primary indicators, Swiss Life showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with AXA SA and Swiss Life

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

The idea behind AXA SA and Swiss Life Holding 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.