Correlation Between ALLIANZ SE and AXA SA

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

By analyzing existing cross correlation between ALLIANZ SE UNSPADR and AXA SA, you can compare the effects of market volatilities on ALLIANZ SE and AXA SA 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 ALLIANZ SE with a short position of AXA SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of ALLIANZ SE and AXA SA.

Diversification Opportunities for ALLIANZ SE and AXA SA

0.21

Correlation Coefficient

ALLIANZ SE  AXA SA

Modest diversification

The 3 months correlation between ALLIANZ and AXA is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding ALLIANZ SE UNSPADR and AXA SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AXA SA and ALLIANZ SE 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 ALLIANZ SE UNSPADR are associated (or correlated) with AXA SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AXA SA has no effect on the direction of ALLIANZ SE i.e., ALLIANZ SE and AXA SA go up and down completely randomly.

Pair Corralation between ALLIANZ SE and AXA SA

Assuming the 90 days trading horizon ALLIANZ SE UNSPADR is expected to generate 0.92 times more return on investment than AXA SA. However, ALLIANZ SE UNSPADR is 1.08 times less risky than AXA SA. It trades about 0.01 of its potential returns per unit of risk. AXA SA is currently generating about -0.05 per unit of risk. If you would invest  2,880  in ALLIANZ SE UNSPADR on September 23, 2024 and sell it today you would earn a total of  20.00  from holding ALLIANZ SE UNSPADR or generate 0.69% return on investment over 90 days.

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

ALLIANZ SE UNSPADR  vs.  AXA SA

ALLIANZ SE UNSPADR

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in ALLIANZ SE UNSPADR are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, ALLIANZ SE is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

AXA SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days AXA SA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, AXA SA is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with ALLIANZ SE and AXA SA

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

The idea behind ALLIANZ SE UNSPADR and AXA SA 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .