Correlation Between Axos Financial and BancFirst

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

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

Diversification Opportunities for Axos Financial and BancFirst

0.88

Correlation Coefficient

Axos Financial  BancFirst

Very poor diversification

The 3 months correlation between Axos and BancFirst is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Axos Financial and BancFirst in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BancFirst and Axos Financial 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 Axos Financial are associated (or correlated) with BancFirst. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BancFirst has no effect on the direction of Axos Financial i.e., Axos Financial and BancFirst go up and down completely randomly.

Pair Corralation between Axos Financial and BancFirst

Allowing for the 90-day total investment horizon Axos Financial is expected to under-perform the BancFirst. In addition to that, Axos Financial is 1.14 times more volatile than BancFirst. It trades about -0.2 of its total potential returns per unit of risk. BancFirst is currently generating about -0.07 per unit of volatility. If you would invest  12,579  in BancFirst on November 29, 2024 and sell it today you would lose (906.00) from holding BancFirst or give up 7.2% of portfolio value over 90 days.

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

Axos Financial  vs.  BancFirst

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.

BancFirst

Risk-Adjusted Performance

Very Weak

Over the last 90 days BancFirst has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest inconsistent performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with Axos Financial and BancFirst

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

The idea behind Axos Financial and BancFirst 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.

Check out your portfolio center.

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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.