Correlation Between EDP Energias and AXA SA

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

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

Diversification Opportunities for EDP Energias and AXA SA

0.47

Correlation Coefficient

EDP Energias  AXA SA

Very weak diversification

The 3 months correlation between EDP and AXA is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding EDP Energias and AXA SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AXA SA and EDP Energias 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 EDP Energias are associated (or correlated) with AXA SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AXA SA has no effect on the direction of EDP Energias i.e., EDP Energias and AXA SA go up and down completely randomly.

Pair Corralation between EDP Energias and AXA SA

Assuming the 90 days trading horizon EDP Energias is expected to generate 1.14 times more return on investment than AXA SA. However, EDP Energias is 1.14 times more volatile than AXA SA. It trades about 0.32 of its potential returns per unit of risk. AXA SA is currently generating about 0.14 per unit of risk. If you would invest  314.00  in EDP Energias on April 24, 2025 and sell it today you would earn a total of  77.00  from holding EDP Energias or generate 24.52% return on investment over 90 days.

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

EDP Energias  vs.  AXA SA

EDP Energias

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in EDP Energias are ranked lower than 24 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, EDP Energias unveiled solid returns over the last few months and may actually be approaching a breakup point.

AXA SA

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in AXA SA are ranked lower than 11 (%) 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.

Pair Trading with EDP Energias and AXA SA

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

The idea behind EDP Energias and AXA 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 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.