Correlation Between BlackRock and AXA SA

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

By analyzing existing cross correlation between BlackRock and AXA SA, you can compare the effects of market volatilities on BlackRock and AXA SA 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 BlackRock with a short position of AXA SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of BlackRock and AXA SA.

Diversification Opportunities for BlackRock and AXA SA

-0.74

Correlation Coefficient

BlackRock  AXA SA

Pay attention - limited upside

The 3 months correlation between BlackRock and AXA is -0.74. Overlapping area represents the amount of risk that can be diversified away by holding BlackRock and AXA SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AXA SA and BlackRock 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 BlackRock are associated (or correlated) with AXA SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AXA SA has no effect on the direction of BlackRock i.e., BlackRock and AXA SA go up and down completely randomly.

Pair Corralation between BlackRock and AXA SA

Assuming the 90 days trading horizon BlackRock is expected to under-perform the AXA SA. But the stock apears to be less risky and, when comparing its historical volatility, BlackRock is 1.94 times less risky than AXA SA. The stock trades about -0.37 of its potential returns per unit of risk. The AXA SA is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest  3,413  in AXA SA on September 23, 2024 and sell it today you would lose (27.00) from holding AXA SA or give up 0.79% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	36.36%
Values	Daily Returns

BlackRock  vs.  AXA SA

BlackRock

Risk-Adjusted Performance

0 of 100

Solid

Over the last 90 days BlackRock has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly fragile basic indicators, BlackRock reported solid returns over the last few months and may actually be approaching a breakup point.

AXA SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days AXA SA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, AXA SA is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with BlackRock and AXA SA

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

The idea behind BlackRock and AXA SA 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.