Correlation Between AXIS Capital and Renaissancere Holdings

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

Diversification Opportunities for AXIS Capital and Renaissancere Holdings

-0.41

Correlation Coefficient

AXIS Capital  Renaissancere Holdings

Very good diversification

The 3 months correlation between AXIS and Renaissancere is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding AXIS Capital Holdings and Renaissancere Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Renaissancere Holdings 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 Renaissancere Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Renaissancere Holdings has no effect on the direction of AXIS Capital i.e., AXIS Capital and Renaissancere Holdings go up and down completely randomly.

Pair Corralation between AXIS Capital and Renaissancere Holdings

Considering the 90-day investment horizon AXIS Capital Holdings is expected to generate 0.82 times more return on investment than Renaissancere Holdings. However, AXIS Capital Holdings is 1.23 times less risky than Renaissancere Holdings. It trades about 0.14 of its potential returns per unit of risk. Renaissancere Holdings is currently generating about -0.01 per unit of risk. If you would invest  8,833  in AXIS Capital Holdings on December 29, 2024 and sell it today you would earn a total of  1,118  from holding AXIS Capital Holdings or generate 12.66% return on investment over 90 days.

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

AXIS Capital Holdings  vs.  Renaissancere Holdings

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.

Renaissancere Holdings

Risk-Adjusted Performance

Very Weak

Over the last 90 days Renaissancere Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Renaissancere Holdings 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 Renaissancere Holdings

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

The idea behind AXIS Capital Holdings and Renaissancere Holdings 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 Stocks Directory module to find actively traded stocks across global markets.