Correlation Between Axos Financial and Guild Holdings

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

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

Diversification Opportunities for Axos Financial and Guild Holdings

-0.11

Correlation Coefficient

Axos Financial  Guild Holdings

Good diversification

The 3 months correlation between Axos and Guild is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding Axos Financial and Guild Holdings Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Guild Holdings 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 Guild Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Guild Holdings has no effect on the direction of Axos Financial i.e., Axos Financial and Guild Holdings go up and down completely randomly.

Pair Corralation between Axos Financial and Guild Holdings

Allowing for the 90-day total investment horizon Axos Financial is expected to under-perform the Guild Holdings. But the stock apears to be less risky and, when comparing its historical volatility, Axos Financial is 1.65 times less risky than Guild Holdings. The stock trades about -0.08 of its potential returns per unit of risk. The Guild Holdings Co is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  1,360  in Guild Holdings Co on December 26, 2024 and sell it today you would earn a total of  8.00  from holding Guild Holdings Co or generate 0.59% 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.  Guild Holdings Co

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 latest unsteady performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Guild Holdings

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Guild Holdings Co are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound essential indicators, Guild Holdings is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Axos Financial and Guild Holdings

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

The idea behind Axos Financial and Guild Holdings Co 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.