Correlation Between Affinity Bancshares and Axos Financial

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

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

Diversification Opportunities for Affinity Bancshares and Axos Financial

0.7

Correlation Coefficient

Affinity Bancshares  Axos Financial

Poor diversification

The 3 months correlation between Affinity and Axos is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Affinity Bancshares and Axos Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Axos Financial and Affinity Bancshares 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 Affinity Bancshares are associated (or correlated) with Axos Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Axos Financial has no effect on the direction of Affinity Bancshares i.e., Affinity Bancshares and Axos Financial go up and down completely randomly.

Pair Corralation between Affinity Bancshares and Axos Financial

Given the investment horizon of 90 days Affinity Bancshares is expected to generate 1.55 times more return on investment than Axos Financial. However, Affinity Bancshares is 1.55 times more volatile than Axos Financial. It trades about -0.07 of its potential returns per unit of risk. Axos Financial is currently generating about -0.2 per unit of risk. If you would invest  2,167  in Affinity Bancshares on November 29, 2024 and sell it today you would lose (277.00) from holding Affinity Bancshares or give up 12.78% of portfolio value over 90 days.

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

Affinity Bancshares  vs.  Axos Financial

Affinity Bancshares

Risk-Adjusted Performance

Very Weak

Over the last 90 days Affinity Bancshares has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unsteady performance, the Stock's fundamental drivers remain strong and the recent confusion on Wall Street may also be a sign of long-lasting gains for the firm traders.

Axos Financial

Risk-Adjusted Performance

Very Weak

Over the last 90 days Axos Financial has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in March 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Affinity Bancshares and Axos Financial

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

The idea behind Affinity Bancshares and Axos Financial 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.