Correlation Between AXA SA and Iberdrola

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

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

Diversification Opportunities for AXA SA and Iberdrola

0.56

Correlation Coefficient

AXA SA  Iberdrola

Very weak diversification

The 3 months correlation between AXA and Iberdrola is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding AXA SA and Iberdrola SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Iberdrola SA and AXA SA 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 SA are associated (or correlated) with Iberdrola. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Iberdrola SA has no effect on the direction of AXA SA i.e., AXA SA and Iberdrola go up and down completely randomly.

Pair Corralation between AXA SA and Iberdrola

Assuming the 90 days horizon AXA SA is expected to generate 0.92 times more return on investment than Iberdrola. However, AXA SA is 1.09 times less risky than Iberdrola. It trades about 0.16 of its potential returns per unit of risk. Iberdrola SA is currently generating about 0.02 per unit of risk. If you would invest  3,819  in AXA SA on April 24, 2025 and sell it today you would earn a total of  380.00  from holding AXA SA or generate 9.95% return on investment over 90 days.

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

AXA SA  vs.  Iberdrola SA

AXA SA

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in AXA SA are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, AXA SA may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Iberdrola SA

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Iberdrola SA are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound technical and fundamental indicators, Iberdrola is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with AXA SA and Iberdrola

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

The idea behind AXA SA and Iberdrola 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.

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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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.