Correlation Between Axos Financial and Better Home
Can any of the company-specific risk be diversified away by investing in both Axos Financial and Better Home 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 Better Home into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Axos Financial and Better Home Finance, you can compare the effects of market volatilities on Axos Financial and Better Home 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 Better Home. Check out your portfolio center. Please also check ongoing floating volatility patterns of Axos Financial and Better Home.
Diversification Opportunities for Axos Financial and Better Home
-0.01 | Correlation Coefficient |
Good diversification
The 3 months correlation between Axos and Better is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding Axos Financial and Better Home Finance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Better Home Finance 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 Better Home. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Better Home Finance has no effect on the direction of Axos Financial i.e., Axos Financial and Better Home go up and down completely randomly.
Pair Corralation between Axos Financial and Better Home
Allowing for the 90-day total investment horizon Axos Financial is expected to under-perform the Better Home. But the stock apears to be less risky and, when comparing its historical volatility, Axos Financial is 16.5 times less risky than Better Home. The stock trades about -0.14 of its potential returns per unit of risk. The Better Home Finance is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 8.00 in Better Home Finance on December 2, 2024 and sell it today you would lose (2.02) from holding Better Home Finance or give up 25.25% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 76.19% |
Values | Daily Returns |
Axos Financial vs. Better Home Finance
Performance |
Timeline |
Axos Financial |
Better Home Finance |
Axos Financial and Better Home Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Axos Financial and Better Home
The main advantage of trading using opposite Axos Financial and Better Home positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Axos Financial position performs unexpectedly, Better Home 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 Better Home will offset losses from the drop in Better Home's long position.Axos Financial vs. National Bank Holdings | Axos Financial vs. Community West Bancshares | Axos Financial vs. First Capital | Axos Financial vs. Home Bancorp |
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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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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