Correlation Between Swiss Life and AXA SA

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

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

Diversification Opportunities for Swiss Life and AXA SA

0.52

Correlation Coefficient

Swiss Life  AXA SA

Very weak diversification

The 3 months correlation between Swiss and AXA is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Swiss Life Holding and AXA SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AXA SA and Swiss Life 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 Swiss Life Holding 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 Swiss Life i.e., Swiss Life and AXA SA go up and down completely randomly.

Pair Corralation between Swiss Life and AXA SA

Assuming the 90 days horizon Swiss Life Holding is expected to generate 0.76 times more return on investment than AXA SA. However, Swiss Life Holding is 1.31 times less risky than AXA SA. It trades about 0.02 of its potential returns per unit of risk. AXA SA is currently generating about -0.07 per unit of risk. If you would invest  4,100  in Swiss Life Holding on September 4, 2024 and sell it today you would earn a total of  46.00  from holding Swiss Life Holding or generate 1.12% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.44%
Values	Daily Returns

Swiss Life Holding  vs.  AXA SA

Swiss Life Holding

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Swiss Life Holding are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong primary indicators, Swiss Life is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

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 latest weak performance, the Stock's technical indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with Swiss Life and AXA SA

The main advantage of trading using opposite Swiss Life and AXA SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Swiss Life 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 Swiss Life Holding 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.

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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.