  In the covariant quark-diquark model the effective Bethe-Salpeter (BS)
equations for the nucleon and the $\Delta$ are solved including scalar {\em and
axialvector} diquark correlations. Their quark substructure is effectively
taken into account in both, the interaction kernel of the BS equations and the
currents employed to calculate nucleon observables. Electromagnetic current
conservation is maintained. The electric form factors of proton and neutron
match the data. Their magnetic moments improve considerably by including
axialvector diquarks and photon induced scalar-axialvector transitions. The
isoscalar magnetic moment can be reproduced, the isovector contribution is
about 15% too small. The ratio $\mu G_E/G_M$ and the axial and strong couplings
$g_A$, $g_{\pi NN}$, provide an upper bound on the relative importance of
axialvector diquarks confirming that scalar diquarks nevertheless describe the
dominant 2-quark correlations inside nucleons.
