Correlation Between AXIS Capital and MBIA

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

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

Diversification Opportunities for AXIS Capital and MBIA

-0.64

Correlation Coefficient

AXIS Capital  MBIA

Excellent diversification

The 3 months correlation between AXIS and MBIA is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding AXIS Capital Holdings and MBIA Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MBIA Inc and AXIS Capital 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 AXIS Capital Holdings are associated (or correlated) with MBIA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MBIA Inc has no effect on the direction of AXIS Capital i.e., AXIS Capital and MBIA go up and down completely randomly.

Pair Corralation between AXIS Capital and MBIA

Considering the 90-day investment horizon AXIS Capital Holdings is expected to under-perform the MBIA. But the stock apears to be less risky and, when comparing its historical volatility, AXIS Capital Holdings is 2.14 times less risky than MBIA. The stock trades about -0.06 of its potential returns per unit of risk. The MBIA Inc is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  469.00  in MBIA Inc on May 5, 2025 and sell it today you would earn a total of  91.00  from holding MBIA Inc or generate 19.4% return on investment over 90 days.

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

AXIS Capital Holdings  vs.  MBIA Inc

AXIS Capital Holdings

Risk-Adjusted Performance

Very Weak

Over the last 90 days AXIS Capital Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, AXIS Capital is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

MBIA Inc

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in MBIA Inc are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite fairly unsteady fundamental drivers, MBIA demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with AXIS Capital and MBIA

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

The idea behind AXIS Capital Holdings and MBIA Inc 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.