Correlation Between Axos Financial and Park National

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

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

Diversification Opportunities for Axos Financial and Park National

0.96

Correlation Coefficient

Axos Financial  Park National

Almost no diversification

The 3 months correlation between Axos and Park is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding Axos Financial and Park National in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Park National 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 Park National. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Park National has no effect on the direction of Axos Financial i.e., Axos Financial and Park National go up and down completely randomly.

Pair Corralation between Axos Financial and Park National

Allowing for the 90-day total investment horizon Axos Financial is expected to under-perform the Park National. In addition to that, Axos Financial is 1.07 times more volatile than Park National. It trades about -0.35 of its total potential returns per unit of risk. Park National is currently generating about -0.27 per unit of volatility. If you would invest  18,838  in Park National on October 9, 2024 and sell it today you would lose (1,770) from holding Park National or give up 9.4% of portfolio value over 90 days.

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

Axos Financial  vs.  Park National

Axos Financial

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Axos Financial are ranked lower than 6 (%) 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.

Park National

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Park National are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite quite unfluctuating basic indicators, Park National may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Axos Financial and Park National

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

The idea behind Axos Financial and Park National 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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.