Correlation Between AXIS Capital and MBIA

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

Diversification Opportunities for AXIS Capital and MBIA

-0.32

Correlation Coefficient

AXIS Capital  MBIA

Very good diversification

The 3 months correlation between AXIS and MBIA is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding AXIS Capital Holdings and MBIA Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MBIA Inc 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 MBIA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MBIA Inc has no effect on the direction of AXIS Capital i.e., AXIS Capital and MBIA go up and down completely randomly.

Pair Corralation between AXIS Capital and MBIA

Considering the 90-day investment horizon AXIS Capital Holdings is expected to generate 0.35 times more return on investment than MBIA. However, AXIS Capital Holdings is 2.86 times less risky than MBIA. It trades about 0.12 of its potential returns per unit of risk. MBIA Inc is currently generating about -0.06 per unit of risk. If you would invest  9,002  in AXIS Capital Holdings on December 26, 2024 and sell it today you would earn a total of  959.00  from holding AXIS Capital Holdings or generate 10.65% return on investment over 90 days.

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

AXIS Capital Holdings  vs.  MBIA Inc

AXIS Capital Holdings

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in AXIS Capital Holdings are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, AXIS Capital may actually be approaching a critical reversion point that can send shares even higher in April 2025.

MBIA Inc

Risk-Adjusted Performance

Very Weak

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

Pair Trading with AXIS Capital and MBIA

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

The idea behind AXIS Capital Holdings and MBIA Inc 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.