Correlation Between Axa Equitable and Travelers Companies

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

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

Diversification Opportunities for Axa Equitable and Travelers Companies

0.34

Correlation Coefficient

Axa Equitable  Travelers Companies

Weak diversification

The 3 months correlation between Axa and Travelers is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Axa Equitable Holdings and The Travelers Companies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on The Travelers Companies and Axa Equitable 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 Axa Equitable Holdings are associated (or correlated) with Travelers Companies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of The Travelers Companies has no effect on the direction of Axa Equitable i.e., Axa Equitable and Travelers Companies go up and down completely randomly.

Pair Corralation between Axa Equitable and Travelers Companies

Considering the 90-day investment horizon Axa Equitable Holdings is expected to generate 1.43 times more return on investment than Travelers Companies. However, Axa Equitable is 1.43 times more volatile than The Travelers Companies. It trades about 0.09 of its potential returns per unit of risk. The Travelers Companies is currently generating about 0.12 per unit of risk. If you would invest  4,679  in Axa Equitable Holdings on December 28, 2024 and sell it today you would earn a total of  456.00  from holding Axa Equitable Holdings or generate 9.75% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.36%
Values	Daily Returns

Axa Equitable Holdings  vs.  The Travelers Companies

Axa Equitable Holdings

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Axa Equitable Holdings are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite fairly fragile basic indicators, Axa Equitable may actually be approaching a critical reversion point that can send shares even higher in April 2025.

The Travelers Companies

Risk-Adjusted Performance

OK

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

Pair Trading with Axa Equitable and Travelers Companies

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

The idea behind Axa Equitable Holdings and The Travelers Companies 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.