Correlation Between Bitcoin and AXA World

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

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

Diversification Opportunities for Bitcoin and AXA World

-0.31

Correlation Coefficient

Bitcoin  AXA World

Very good diversification

The 3 months correlation between Bitcoin and AXA is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Bitcoin and AXA World Funds in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AXA World Funds and Bitcoin 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 Bitcoin are associated (or correlated) with AXA World. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AXA World Funds has no effect on the direction of Bitcoin i.e., Bitcoin and AXA World go up and down completely randomly.

Pair Corralation between Bitcoin and AXA World

Assuming the 90 days trading horizon Bitcoin is expected to under-perform the AXA World. In addition to that, Bitcoin is 4.46 times more volatile than AXA World Funds. It trades about -0.07 of its total potential returns per unit of risk. AXA World Funds is currently generating about 0.16 per unit of volatility. If you would invest  20,581  in AXA World Funds on December 21, 2024 and sell it today you would earn a total of  1,102  from holding AXA World Funds or generate 5.35% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	93.65%
Values	Daily Returns

Bitcoin  vs.  AXA World Funds

Bitcoin

Risk-Adjusted Performance

Very Weak

Over the last 90 days Bitcoin has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Crypto's fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for Bitcoin shareholders.

AXA World Funds

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in AXA World Funds are ranked lower than 12 (%) of all funds and portfolios of funds over the last 90 days. In spite of very healthy primary indicators, AXA World is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Bitcoin and AXA World

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

The idea behind Bitcoin and AXA World Funds 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 Commodity Directory module to find actively traded commodities issued by global exchanges.