Correlation Between Principal Financial and Axa Equitable
Can any of the company-specific risk be diversified away by investing in both Principal Financial and Axa Equitable 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 Principal Financial and Axa Equitable into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Principal Financial Group and Axa Equitable Holdings, you can compare the effects of market volatilities on Principal Financial and Axa Equitable 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 Principal Financial with a short position of Axa Equitable. Check out your portfolio center. Please also check ongoing floating volatility patterns of Principal Financial and Axa Equitable.
Diversification Opportunities for Principal Financial and Axa Equitable
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Principal and Axa is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Principal Financial Group and Axa Equitable Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Axa Equitable Holdings and Principal Financial 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 Principal Financial Group are associated (or correlated) with Axa Equitable. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Axa Equitable Holdings has no effect on the direction of Principal Financial i.e., Principal Financial and Axa Equitable go up and down completely randomly.
Pair Corralation between Principal Financial and Axa Equitable
Considering the 90-day investment horizon Principal Financial Group is expected to under-perform the Axa Equitable. But the stock apears to be less risky and, when comparing its historical volatility, Principal Financial Group is 1.05 times less risky than Axa Equitable. The stock trades about -0.15 of its potential returns per unit of risk. The Axa Equitable Holdings is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 3,742 in Axa Equitable Holdings on January 25, 2024 and sell it today you would earn a total of 65.00 from holding Axa Equitable Holdings or generate 1.74% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 95.65% |
| Values | Daily Returns |
Principal Financial Group vs. Axa Equitable Holdings
Performance |
| Timeline |
| Principal Financial |
| Axa Equitable Holdings |
Principal Financial and Axa Equitable Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Principal Financial and Axa Equitable
The main advantage of trading using opposite Principal Financial and Axa Equitable positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Principal Financial position performs unexpectedly, Axa Equitable 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 Equitable will offset losses from the drop in Axa Equitable's long position.| Principal Financial vs. State Street Corp | Principal Financial vs. Bank of New | Principal Financial vs. SEI Investments | Principal Financial vs. Affiliated Managers Group |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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