Correlation Between Tiptree and AXIS Capital

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

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

Diversification Opportunities for Tiptree and AXIS Capital

0.64

Correlation Coefficient

Tiptree  AXIS Capital

Poor diversification

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

Pair Corralation between Tiptree and AXIS Capital

Given the investment horizon of 90 days Tiptree is expected to generate 1.71 times more return on investment than AXIS Capital. However, Tiptree is 1.71 times more volatile than AXIS Capital Holdings. It trades about -0.01 of its potential returns per unit of risk. AXIS Capital Holdings is currently generating about -0.06 per unit of risk. If you would invest  2,112  in Tiptree on May 4, 2025 and sell it today you would lose (86.00) from holding Tiptree or give up 4.07% of portfolio value over 90 days.

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

Tiptree  vs.  AXIS Capital Holdings

Tiptree

Risk-Adjusted Performance

Very Weak

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

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.

Pair Trading with Tiptree and AXIS Capital

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

The idea behind Tiptree and AXIS Capital Holdings 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.