Correlation Between VR and AXIS Capital

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

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

Diversification Opportunities for VR and AXIS Capital

0.86

Correlation Coefficient

VR  AXIS Capital

Very poor diversification

The 3 months correlation between VR and AXIS is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding VR 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 VR 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 VR 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 VR i.e., VR and AXIS Capital go up and down completely randomly.

Pair Corralation between VR and AXIS Capital

If you would invest  8,508  in AXIS Capital Holdings on September 15, 2024 and sell it today you would earn a total of  669.00  from holding AXIS Capital Holdings or generate 7.86% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	4.76%
Values	Daily Returns

VR  vs.  AXIS Capital Holdings

VR

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days VR has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, VR is not utilizing all of its potentials. The newest stock price agitation, may contribute to short-term losses for the retail investors.

AXIS Capital Holdings

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in AXIS Capital Holdings are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, AXIS Capital unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with VR and AXIS Capital

The main advantage of trading using opposite VR and AXIS Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if VR 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 VR 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.

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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.