Correlation Between Axos Financial and First Citizens

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

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

Diversification Opportunities for Axos Financial and First Citizens

0.91

Correlation Coefficient

Axos Financial  First Citizens

Almost no diversification

The 3 months correlation between Axos and First is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Axos Financial and First Citizens BancShares in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Citizens BancShares 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 First Citizens. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Citizens BancShares has no effect on the direction of Axos Financial i.e., Axos Financial and First Citizens go up and down completely randomly.

Pair Corralation between Axos Financial and First Citizens

Allowing for the 90-day total investment horizon Axos Financial is expected to generate 1.07 times more return on investment than First Citizens. However, Axos Financial is 1.07 times more volatile than First Citizens BancShares. It trades about 0.2 of its potential returns per unit of risk. First Citizens BancShares is currently generating about 0.1 per unit of risk. If you would invest  6,093  in Axos Financial on September 5, 2024 and sell it today you would earn a total of  2,046  from holding Axos Financial or generate 33.58% return on investment over 90 days.

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

Axos Financial  vs.  First Citizens BancShares

Axos Financial

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Axos Financial are ranked lower than 9 (%) 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.

First Citizens BancShares

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in First Citizens BancShares are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat abnormal fundamental indicators, First Citizens sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Axos Financial and First Citizens

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

The idea behind Axos Financial and First Citizens BancShares 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.