Correlation Between Axos Financial and Bank of the

Can any of the company-specific risk be diversified away by investing in both Axos Financial and Bank of the 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 the 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 the, you can compare the effects of market volatilities on Axos Financial and Bank of the 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 the. Check out your portfolio center. Please also check ongoing floating volatility patterns of Axos Financial and Bank of the.

Diversification Opportunities for Axos Financial and Bank of the

0.63

Correlation Coefficient

Axos Financial  Bank of the

Poor diversification

The 3 months correlation between Axos and Bank is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Axos Financial and Bank of the in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bank of the 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 the. 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 the has no effect on the direction of Axos Financial i.e., Axos Financial and Bank of the go up and down completely randomly.

Pair Corralation between Axos Financial and Bank of the

Allowing for the 90-day total investment horizon Axos Financial is expected to generate 1.03 times more return on investment than Bank of the. However, Axos Financial is 1.03 times more volatile than Bank of the. It trades about 0.13 of its potential returns per unit of risk. Bank of the is currently generating about 0.12 per unit of risk. If you would invest  5,167  in Axos Financial on September 3, 2024 and sell it today you would earn a total of  2,916  from holding Axos Financial or generate 56.44% return on investment over 90 days.

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

Axos Financial  vs.  Bank of the

Axos Financial

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Axos Financial are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating basic indicators, Axos Financial showed solid returns over the last few months and may actually be approaching a breakup point.

Bank of the

Risk-Adjusted Performance

10 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Bank of the are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Even with relatively inconsistent basic indicators, Bank of the revealed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Axos Financial and Bank of the

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

The idea behind Axos Financial and Bank of the 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.