Correlation Between Fidelity Disruptive and AXIS Capital

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

By analyzing existing cross correlation between Fidelity Disruptive Communications and AXIS Capital Holdings, you can compare the effects of market volatilities on Fidelity Disruptive and AXIS Capital 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 Fidelity Disruptive with a short position of AXIS Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fidelity Disruptive and AXIS Capital.

Diversification Opportunities for Fidelity Disruptive and AXIS Capital

0.71

Correlation Coefficient

Fidelity Disruptive  AXIS Capital

Poor diversification

The 3 months correlation between Fidelity and AXIS is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Fidelity Disruptive Communicat and AXIS Capital Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AXIS Capital Holdings and Fidelity Disruptive 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 Fidelity Disruptive Communications are associated (or correlated) with AXIS Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AXIS Capital Holdings has no effect on the direction of Fidelity Disruptive i.e., Fidelity Disruptive and AXIS Capital go up and down completely randomly.

Pair Corralation between Fidelity Disruptive and AXIS Capital

Given the investment horizon of 90 days Fidelity Disruptive is expected to generate 1.24 times less return on investment than AXIS Capital. But when comparing it to its historical volatility, Fidelity Disruptive Communications is 1.49 times less risky than AXIS Capital. It trades about 0.27 of its potential returns per unit of risk. AXIS Capital Holdings is currently generating about 0.23 of returns per unit of risk over similar time horizon. If you would invest  7,687  in AXIS Capital Holdings on September 5, 2024 and sell it today you would earn a total of  1,667  from holding AXIS Capital Holdings or generate 21.69% return on investment over 90 days.

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

Fidelity Disruptive Communicat  vs.  AXIS Capital Holdings

Fidelity Disruptive

Risk-Adjusted Performance

21 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Fidelity Disruptive Communications are ranked lower than 21 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak fundamental indicators, Fidelity Disruptive reported solid returns over the last few months and may actually be approaching a breakup point.

AXIS Capital Holdings

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in AXIS Capital Holdings are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively inconsistent basic indicators, AXIS Capital unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Fidelity Disruptive and AXIS Capital

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

The idea behind Fidelity Disruptive Communications and AXIS Capital 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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.