Correlation Between Axos Financial and Evans Bancorp

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

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

Diversification Opportunities for Axos Financial and Evans Bancorp

0.63

Correlation Coefficient

Axos Financial  Evans Bancorp

Poor diversification

The 3 months correlation between Axos and Evans is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Axos Financial and Evans Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Evans Bancorp 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 Evans Bancorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Evans Bancorp has no effect on the direction of Axos Financial i.e., Axos Financial and Evans Bancorp go up and down completely randomly.

Pair Corralation between Axos Financial and Evans Bancorp

Allowing for the 90-day total investment horizon Axos Financial is expected to under-perform the Evans Bancorp. In addition to that, Axos Financial is 1.17 times more volatile than Evans Bancorp. It trades about -0.21 of its total potential returns per unit of risk. Evans Bancorp is currently generating about -0.03 per unit of volatility. If you would invest  4,441  in Evans Bancorp on November 28, 2024 and sell it today you would lose (144.00) from holding Evans Bancorp or give up 3.24% of portfolio value over 90 days.

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

Axos Financial  vs.  Evans Bancorp

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

Evans Bancorp

Risk-Adjusted Performance

Very Weak

Over the last 90 days Evans Bancorp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy fundamental drivers, Evans Bancorp is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Axos Financial and Evans Bancorp

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

The idea behind Axos Financial and Evans Bancorp 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.

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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.