Correlation Between AXIS Capital and Truist Financial

Can any of the company-specific risk be diversified away by investing in both AXIS Capital and Truist Financial 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 Truist Financial 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 Truist Financial, you can compare the effects of market volatilities on AXIS Capital and Truist Financial 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 Truist Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of AXIS Capital and Truist Financial.

Diversification Opportunities for AXIS Capital and Truist Financial

0.28

Correlation Coefficient

AXIS Capital  Truist Financial

Modest diversification

The 3 months correlation between AXIS and Truist is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding AXIS Capital Holdings and Truist Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Truist Financial 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 Truist Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Truist Financial has no effect on the direction of AXIS Capital i.e., AXIS Capital and Truist Financial go up and down completely randomly.

Pair Corralation between AXIS Capital and Truist Financial

Assuming the 90 days trading horizon AXIS Capital Holdings is expected to under-perform the Truist Financial. But the preferred stock apears to be less risky and, when comparing its historical volatility, AXIS Capital Holdings is 1.01 times less risky than Truist Financial. The preferred stock trades about -0.06 of its potential returns per unit of risk. The Truist Financial is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  2,041  in Truist Financial on November 30, 2024 and sell it today you would lose (4.00) from holding Truist Financial or give up 0.2% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.33%
Values	Daily Returns

AXIS Capital Holdings  vs.  Truist Financial

AXIS Capital Holdings

Risk-Adjusted Performance

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.

Truist Financial

Risk-Adjusted Performance

Very Weak

Over the last 90 days Truist Financial has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable fundamental indicators, Truist Financial is not utilizing all of its potentials. The recent stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with AXIS Capital and Truist Financial

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

The idea behind AXIS Capital Holdings and Truist Financial 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.