Correlation Between AXIS Capital and Allstate

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

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

Diversification Opportunities for AXIS Capital and Allstate

0.5

Correlation Coefficient

AXIS Capital  Allstate

Very weak diversification

The 3 months correlation between AXIS and Allstate is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding AXIS Capital Holdings and The Allstate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Allstate and AXIS Capital 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 AXIS Capital Holdings are associated (or correlated) with Allstate. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Allstate has no effect on the direction of AXIS Capital i.e., AXIS Capital and Allstate go up and down completely randomly.

Pair Corralation between AXIS Capital and Allstate

Assuming the 90 days trading horizon AXIS Capital Holdings is expected to under-perform the Allstate. In addition to that, AXIS Capital is 1.13 times more volatile than The Allstate. It trades about -0.21 of its total potential returns per unit of risk. The Allstate is currently generating about -0.12 per unit of volatility. If you would invest  2,091  in The Allstate on September 22, 2024 and sell it today you would lose (41.00) from holding The Allstate or give up 1.96% of portfolio value over 90 days.

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

AXIS Capital Holdings  vs.  The Allstate

AXIS Capital Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days AXIS Capital Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. 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.

Allstate

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days The Allstate has generated negative risk-adjusted returns adding no value to investors with long positions. Despite inconsistent performance in the last few months, the Preferred Stock's essential indicators remain fairly strong which may send shares a bit higher in January 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Pair Trading with AXIS Capital and Allstate

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

The idea behind AXIS Capital Holdings and The Allstate 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.