Correlation Between BB Seguridade and Axa Equitable

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

By analyzing existing cross correlation between BB Seguridade Participacoes and Axa Equitable Holdings, you can compare the effects of market volatilities on BB Seguridade and Axa Equitable 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 BB Seguridade with a short position of Axa Equitable. Check out your portfolio center. Please also check ongoing floating volatility patterns of BB Seguridade and Axa Equitable.

Diversification Opportunities for BB Seguridade and Axa Equitable

0.69

Correlation Coefficient

BB Seguridade  Axa Equitable

Poor diversification

The 3 months correlation between BBSEY and Axa is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding BB Seguridade Participacoes and Axa Equitable Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Axa Equitable Holdings and BB Seguridade 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 BB Seguridade Participacoes are associated (or correlated) with Axa Equitable. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Axa Equitable Holdings has no effect on the direction of BB Seguridade i.e., BB Seguridade and Axa Equitable go up and down completely randomly.

Pair Corralation between BB Seguridade and Axa Equitable

Assuming the 90 days horizon BB Seguridade Participacoes is expected to generate 0.87 times more return on investment than Axa Equitable. However, BB Seguridade Participacoes is 1.15 times less risky than Axa Equitable. It trades about 0.22 of its potential returns per unit of risk. Axa Equitable Holdings is currently generating about 0.15 per unit of risk. If you would invest  561.00  in BB Seguridade Participacoes on December 18, 2024 and sell it today you would earn a total of  138.00  from holding BB Seguridade Participacoes or generate 24.6% return on investment over 90 days.

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

BB Seguridade Participacoes  vs.  Axa Equitable Holdings

BB Seguridade Partic

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in BB Seguridade Participacoes are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of fairly fragile technical and fundamental indicators, BB Seguridade showed solid returns over the last few months and may actually be approaching a breakup point.

Axa Equitable Holdings

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Axa Equitable Holdings are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite fairly fragile basic indicators, Axa Equitable demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with BB Seguridade and Axa Equitable

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

The idea behind BB Seguridade Participacoes and Axa Equitable 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.