Correlation Between Axos Financial and Investar Holding

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

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

Diversification Opportunities for Axos Financial and Investar Holding

0.8

Correlation Coefficient

Axos Financial  Investar Holding

Very poor diversification

The 3 months correlation between Axos and Investar is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Axos Financial and Investar Holding Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Investar Holding Corp 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 Investar Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Investar Holding Corp has no effect on the direction of Axos Financial i.e., Axos Financial and Investar Holding go up and down completely randomly.

Pair Corralation between Axos Financial and Investar Holding

Allowing for the 90-day total investment horizon Axos Financial is expected to generate 1.03 times more return on investment than Investar Holding. However, Axos Financial is 1.03 times more volatile than Investar Holding Corp. It trades about -0.08 of its potential returns per unit of risk. Investar Holding Corp is currently generating about -0.19 per unit of risk. If you would invest  7,090  in Axos Financial on December 28, 2024 and sell it today you would lose (618.00) from holding Axos Financial or give up 8.72% of portfolio value over 90 days.

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

Axos Financial  vs.  Investar Holding Corp

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.

Investar Holding Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days Investar Holding Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Even with unsteady performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in April 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with Axos Financial and Investar Holding

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

The idea behind Axos Financial and Investar Holding Corp 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.