Correlation Between AXS 125X and AXS TSLA

Can any of the company-specific risk be diversified away by investing in both AXS 125X and AXS TSLA 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 AXS 125X and AXS TSLA into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between AXS 125X NVDA and AXS TSLA Bear, you can compare the effects of market volatilities on AXS 125X and AXS TSLA 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 AXS 125X with a short position of AXS TSLA. Check out your portfolio center. Please also check ongoing floating volatility patterns of AXS 125X and AXS TSLA.

Diversification Opportunities for AXS 125X and AXS TSLA

0.57

Correlation Coefficient

AXS 125X  AXS TSLA

Very weak diversification

The 3 months correlation between AXS and AXS is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding AXS 125X NVDA and AXS TSLA Bear in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AXS TSLA Bear and AXS 125X 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 AXS 125X NVDA are associated (or correlated) with AXS TSLA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AXS TSLA Bear has no effect on the direction of AXS 125X i.e., AXS 125X and AXS TSLA go up and down completely randomly.

Pair Corralation between AXS 125X and AXS TSLA

Given the investment horizon of 90 days AXS 125X is expected to generate 6.13 times less return on investment than AXS TSLA. But when comparing it to its historical volatility, AXS 125X NVDA is 1.46 times less risky than AXS TSLA. It trades about 0.04 of its potential returns per unit of risk. AXS TSLA Bear is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  2,355  in AXS TSLA Bear on December 27, 2024 and sell it today you would earn a total of  1,816  from holding AXS TSLA Bear or generate 77.11% return on investment over 90 days.

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

AXS 125X NVDA  vs.  AXS TSLA Bear

AXS 125X NVDA

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in AXS 125X NVDA are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak fundamental indicators, AXS 125X unveiled solid returns over the last few months and may actually be approaching a breakup point.

AXS TSLA Bear

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in AXS TSLA Bear are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Even with relatively uncertain essential indicators, AXS TSLA reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with AXS 125X and AXS TSLA

The main advantage of trading using opposite AXS 125X and AXS TSLA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AXS 125X position performs unexpectedly, AXS TSLA 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 AXS TSLA will offset losses from the drop in AXS TSLA's long position.

The idea behind AXS 125X NVDA and AXS TSLA Bear 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 CEOs Directory module to screen CEOs from public companies around the world.