Correlation Between AXS TSLA and AXS 125X

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

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

Diversification Opportunities for AXS TSLA and AXS 125X

0.57

Correlation Coefficient

AXS TSLA  AXS 125X

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 TSLA Bear and AXS 125X NVDA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AXS 125X NVDA and AXS TSLA 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 TSLA Bear are associated (or correlated) with AXS 125X. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AXS 125X NVDA has no effect on the direction of AXS TSLA i.e., AXS TSLA and AXS 125X go up and down completely randomly.

Pair Corralation between AXS TSLA and AXS 125X

Given the investment horizon of 90 days AXS TSLA Bear is expected to generate 1.46 times more return on investment than AXS 125X. However, AXS TSLA is 1.46 times more volatile than AXS 125X NVDA. It trades about 0.15 of its potential returns per unit of risk. AXS 125X NVDA is currently generating about 0.04 per unit of risk. 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 TSLA Bear  vs.  AXS 125X NVDA

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.

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.

Pair Trading with AXS TSLA and AXS 125X

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

The idea behind AXS TSLA Bear and AXS 125X NVDA 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..