Correlation Between Axos Financial and Citizens Financial

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

Diversification Opportunities for Axos Financial and Citizens Financial

0.06

Correlation Coefficient

Axos Financial  Citizens Financial

Significant diversification

The 3 months correlation between Axos and Citizens is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Axos Financial and Citizens Financial Group, in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Citizens Financial Group, 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 Citizens Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Citizens Financial Group, has no effect on the direction of Axos Financial i.e., Axos Financial and Citizens Financial go up and down completely randomly.

Pair Corralation between Axos Financial and Citizens Financial

Allowing for the 90-day total investment horizon Axos Financial is expected to under-perform the Citizens Financial. In addition to that, Axos Financial is 2.4 times more volatile than Citizens Financial Group,. It trades about -0.17 of its total potential returns per unit of risk. Citizens Financial Group, is currently generating about -0.01 per unit of volatility. If you would invest  2,672  in Citizens Financial Group, on December 1, 2024 and sell it today you would lose (19.00) from holding Citizens Financial Group, or give up 0.71% of portfolio value over 90 days.

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

Axos Financial  vs.  Citizens Financial Group,

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 April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Citizens Financial Group,

Risk-Adjusted Performance

Very Weak

Over the last 90 days Citizens Financial Group, has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong technical and fundamental indicators, Citizens Financial is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Axos Financial and Citizens Financial

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

The idea behind Axos Financial and Citizens Financial Group, 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.