Trade action flash - Long AXA / Short CNP March 03, 2013
MRPT(c) mean reverting pair trading strategies CS FP: Eur 18.34; CNP FP: Eur 15.19 We recommend going long AXA (CS FP) / short CNP (CNP FP). Within the large European multi-line insurance companies (AXA, Generali, Allianz), we had highlighted in our last IRS Europe Insurance report the overvaluation of AXA vs. its competitors and had recommended a short position vs. Generali, Allianz, and even the CAC Index. We are still maintaining these trades for fundamental reasons (the trade is up quite a bit since the beginning of the year). However, given the significant short-term underperformance of AXA vs. CNP, its French competitor in the life insurance business, and relative values in favor of AXA, the trade long AXA / short CNP is justified. Moreover, the trade is mean reverting. FULL REPORT ATTACHED