Correlation Between Axos Financial and OP Bancorp

Can any of the company-specific risk be diversified away by investing in both Axos Financial and OP 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 OP 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 OP Bancorp, you can compare the effects of market volatilities on Axos Financial and OP 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 OP Bancorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Axos Financial and OP Bancorp.

Diversification Opportunities for Axos Financial and OP Bancorp

0.83

Correlation Coefficient

Axos Financial  OP Bancorp

Very poor diversification

The 3 months correlation between Axos and OPBK is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Axos Financial and OP Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on OP 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 OP Bancorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of OP Bancorp has no effect on the direction of Axos Financial i.e., Axos Financial and OP Bancorp go up and down completely randomly.

Pair Corralation between Axos Financial and OP Bancorp

Allowing for the 90-day total investment horizon Axos Financial is expected to generate 0.63 times more return on investment than OP Bancorp. However, Axos Financial is 1.59 times less risky than OP Bancorp. It trades about -0.09 of its potential returns per unit of risk. OP Bancorp is currently generating about -0.13 per unit of risk. If you would invest  7,261  in Axos Financial on December 26, 2024 and sell it today you would lose (707.00) from holding Axos Financial or give up 9.74% 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.  OP 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 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.

OP Bancorp

Risk-Adjusted Performance

Very Weak

Over the last 90 days OP Bancorp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's fundamental drivers remain quite persistent which may send shares a bit higher in April 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with Axos Financial and OP Bancorp

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

The idea behind Axos Financial and OP 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.

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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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.