Correlation Between Axos Financial and First Merchants
Can any of the company-specific risk be diversified away by investing in both Axos Financial and First Merchants 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 Merchants 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 Merchants, you can compare the effects of market volatilities on Axos Financial and First Merchants 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 Merchants. Check out your portfolio center. Please also check ongoing floating volatility patterns of Axos Financial and First Merchants.
Diversification Opportunities for Axos Financial and First Merchants
-0.01 | Correlation Coefficient |
Good diversification
The 3 months correlation between Axos and First is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding Axos Financial and First Merchants in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Merchants 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 Merchants. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Merchants has no effect on the direction of Axos Financial i.e., Axos Financial and First Merchants go up and down completely randomly.
Pair Corralation between Axos Financial and First Merchants
Allowing for the 90-day total investment horizon Axos Financial is expected to under-perform the First Merchants. In addition to that, Axos Financial is 1.19 times more volatile than First Merchants. It trades about -0.13 of its total potential returns per unit of risk. First Merchants is currently generating about 0.03 per unit of volatility. If you would invest 2,544 in First Merchants on December 5, 2024 and sell it today you would earn a total of 18.00 from holding First Merchants or generate 0.71% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Axos Financial vs. First Merchants
Performance |
Timeline |
Axos Financial |
First Merchants |
Axos Financial and First Merchants Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Axos Financial and First Merchants
The main advantage of trading using opposite Axos Financial and First Merchants positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Axos Financial position performs unexpectedly, First Merchants 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 Merchants will offset losses from the drop in First Merchants' long position.Axos Financial vs. National Bank Holdings | Axos Financial vs. Community West Bancshares | Axos Financial vs. First Capital | Axos Financial vs. Home Bancorp |
First Merchants vs. OceanFirst Financial Corp | First Merchants vs. Old National Bancorp | First Merchants vs. Old National Bancorp |
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 Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
Other Complementary Tools
Volatility Analysis Get historical volatility and risk analysis based on latest market data | |
Portfolio Center All portfolio management and optimization tools to improve performance of your portfolios | |
Fundamentals Comparison Compare fundamentals across multiple equities to find investing opportunities | |
Fundamental Analysis View fundamental data based on most recent published financial statements | |
Equity Forecasting Use basic forecasting models to generate price predictions and determine price momentum |