Correlation Between AXS 2X and 1x Short

Can any of the company-specific risk be diversified away by investing in both AXS 2X and 1x Short 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 2X and 1x Short into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between AXS 2X Innovation and 1x Short VIX, you can compare the effects of market volatilities on AXS 2X and 1x Short 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 2X with a short position of 1x Short. Check out your portfolio center. Please also check ongoing floating volatility patterns of AXS 2X and 1x Short.

Diversification Opportunities for AXS 2X and 1x Short

0.12

Correlation Coefficient

AXS 2X  1x Short

Average diversification

The 3 months correlation between AXS and SVIX is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding AXS 2X Innovation and 1x Short VIX in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on 1x Short VIX and AXS 2X 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 2X Innovation are associated (or correlated) with 1x Short. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of 1x Short VIX has no effect on the direction of AXS 2X i.e., AXS 2X and 1x Short go up and down completely randomly.

Pair Corralation between AXS 2X and 1x Short

Given the investment horizon of 90 days AXS 2X Innovation is expected to generate 0.84 times more return on investment than 1x Short. However, AXS 2X Innovation is 1.19 times less risky than 1x Short. It trades about -0.07 of its potential returns per unit of risk. 1x Short VIX is currently generating about -0.11 per unit of risk. If you would invest  5,149  in AXS 2X Innovation on October 10, 2024 and sell it today you would lose (493.00) from holding AXS 2X Innovation or give up 9.57% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	95.24%
Values	Daily Returns

AXS 2X Innovation  vs.   1x Short VIX

AXS 2X Innovation

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days AXS 2X Innovation has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, AXS 2X is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

1x Short VIX

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in 1x Short VIX are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak forward indicators, 1x Short may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with AXS 2X and 1x Short

The main advantage of trading using opposite AXS 2X and 1x Short positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AXS 2X position performs unexpectedly, 1x Short 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 1x Short will offset losses from the drop in 1x Short's long position.

The idea behind AXS 2X Innovation and 1x Short VIX 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.