Correlation Between Axa Equitable and Atlantic American

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

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

Diversification Opportunities for Axa Equitable and Atlantic American

-0.29

Correlation Coefficient

Axa Equitable  Atlantic American

Very good diversification

The 3 months correlation between Axa and Atlantic is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding Axa Equitable Holdings and Atlantic American in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Atlantic American and Axa Equitable 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 Axa Equitable Holdings are associated (or correlated) with Atlantic American. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Atlantic American has no effect on the direction of Axa Equitable i.e., Axa Equitable and Atlantic American go up and down completely randomly.

Pair Corralation between Axa Equitable and Atlantic American

Considering the 90-day investment horizon Axa Equitable Holdings is expected to generate 0.25 times more return on investment than Atlantic American. However, Axa Equitable Holdings is 4.06 times less risky than Atlantic American. It trades about -0.09 of its potential returns per unit of risk. Atlantic American is currently generating about -0.34 per unit of risk. If you would invest  3,646  in Axa Equitable Holdings on January 20, 2024 and sell it today you would lose (82.00) from holding Axa Equitable Holdings or give up 2.25% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.45%
Values	Daily Returns

Axa Equitable Holdings  vs.  Atlantic American

Axa Equitable Holdings

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Axa Equitable Holdings are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite fairly fragile basic indicators, Axa Equitable may actually be approaching a critical reversion point that can send shares even higher in May 2024.

Atlantic American

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Atlantic American has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's primary indicators remain rather sound which may send shares a bit higher in May 2024. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Axa Equitable and Atlantic American

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

The idea behind Axa Equitable Holdings and Atlantic American 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.