Correlation Between AXIS Capital and IShares Global

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

Diversification Opportunities for AXIS Capital and IShares Global

0.37

Correlation Coefficient

AXIS Capital  IShares Global

Weak diversification

The 3 months correlation between AXIS and IShares is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding AXIS Capital Holdings and iShares Global Comm in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Global Comm 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 IShares Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Global Comm has no effect on the direction of AXIS Capital i.e., AXIS Capital and IShares Global go up and down completely randomly.

Pair Corralation between AXIS Capital and IShares Global

Considering the 90-day investment horizon AXIS Capital Holdings is expected to generate 1.5 times more return on investment than IShares Global. However, AXIS Capital is 1.5 times more volatile than iShares Global Comm. It trades about 0.14 of its potential returns per unit of risk. iShares Global Comm is currently generating about 0.04 per unit of risk. If you would invest  8,885  in AXIS Capital Holdings on December 27, 2024 and sell it today you would earn a total of  1,085  from holding AXIS Capital Holdings or generate 12.21% return on investment over 90 days.

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

AXIS Capital Holdings  vs.  iShares Global Comm

AXIS Capital Holdings

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in AXIS Capital Holdings are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, AXIS Capital unveiled solid returns over the last few months and may actually be approaching a breakup point.

iShares Global Comm

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in iShares Global Comm are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable basic indicators, IShares Global is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with AXIS Capital and IShares Global

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

The idea behind AXIS Capital Holdings and iShares Global Comm 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.