Correlation Between Enstar Group and Axa SA

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

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

Diversification Opportunities for Enstar Group and Axa SA

0.0

Correlation Coefficient

Enstar Group  Axa SA

Pay attention - limited upside

The 3 months correlation between Enstar and Axa is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Enstar Group Limited and Axa SA ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Axa SA ADR and Enstar Group 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 Enstar Group Limited 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 ADR has no effect on the direction of Enstar Group i.e., Enstar Group and Axa SA go up and down completely randomly.

Pair Corralation between Enstar Group and Axa SA

If you would invest  32,710  in Enstar Group Limited on November 28, 2024 and sell it today you would earn a total of  560.00  from holding Enstar Group Limited or generate 1.71% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Enstar Group Limited  vs.  Axa SA ADR

Enstar Group Limited

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Enstar Group Limited are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable technical and fundamental indicators, Enstar Group is not utilizing all of its potentials. The recent stock price agitation, may contribute to short-term losses for the retail investors.

Axa SA ADR

Risk-Adjusted Performance

Very Weak

Over the last 90 days Axa SA ADR has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong technical indicators, Axa SA is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Enstar Group and Axa SA

The main advantage of trading using opposite Enstar Group and Axa SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Enstar Group 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 Enstar Group Limited and Axa SA ADR 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.

Check out your portfolio center.

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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.