Correlation Between Axos Financial and Bank of Ireland

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

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

Diversification Opportunities for Axos Financial and Bank of Ireland

-0.64

Correlation Coefficient

Axos Financial  Bank of Ireland

Excellent diversification

The 3 months correlation between Axos and Bank is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding Axos Financial and Bank of Ireland in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bank of Ireland 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 Bank of Ireland. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bank of Ireland has no effect on the direction of Axos Financial i.e., Axos Financial and Bank of Ireland go up and down completely randomly.

Pair Corralation between Axos Financial and Bank of Ireland

Allowing for the 90-day total investment horizon Axos Financial is expected to generate 1.02 times more return on investment than Bank of Ireland. However, Axos Financial is 1.02 times more volatile than Bank of Ireland. It trades about 0.09 of its potential returns per unit of risk. Bank of Ireland is currently generating about 0.03 per unit of risk. If you would invest  4,982  in Axos Financial on September 5, 2024 and sell it today you would earn a total of  3,020  from holding Axos Financial or generate 60.62% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	99.2%
Values	Daily Returns

Axos Financial  vs.  Bank of Ireland

Axos Financial

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Axos Financial are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unsteady basic indicators, Axos Financial showed solid returns over the last few months and may actually be approaching a breakup point.

Bank of Ireland

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Bank of Ireland has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with Axos Financial and Bank of Ireland

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

The idea behind Axos Financial and Bank of Ireland 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.