Correlation Between Axos Financial and CNB Financial

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

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

Diversification Opportunities for Axos Financial and CNB Financial

0.82

Correlation Coefficient

Axos Financial  CNB Financial

Very poor diversification

The 3 months correlation between Axos and CNB is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Axos Financial and CNB Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CNB Financial 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 CNB Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CNB Financial has no effect on the direction of Axos Financial i.e., Axos Financial and CNB Financial go up and down completely randomly.

Pair Corralation between Axos Financial and CNB Financial

Allowing for the 90-day total investment horizon Axos Financial is expected to under-perform the CNB Financial. In addition to that, Axos Financial is 1.29 times more volatile than CNB Financial. It trades about -0.05 of its total potential returns per unit of risk. CNB Financial is currently generating about -0.04 per unit of volatility. If you would invest  2,535  in CNB Financial on October 26, 2024 and sell it today you would lose (28.00) from holding CNB Financial or give up 1.1% 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.  CNB Financial

Axos Financial

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Axos Financial are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unsteady basic indicators, Axos Financial may actually be approaching a critical reversion point that can send shares even higher in February 2025.

CNB Financial

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CNB Financial has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, CNB Financial is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Axos Financial and CNB Financial

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

The idea behind Axos Financial and CNB 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.