Correlation Between Axos Financial and Republic Bancorp

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

Diversification Opportunities for Axos Financial and Republic Bancorp

0.49

Correlation Coefficient

Axos Financial  Republic Bancorp

Very weak diversification

The 3 months correlation between Axos and Republic is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Axos Financial and Republic Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Republic 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 Republic Bancorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Republic Bancorp has no effect on the direction of Axos Financial i.e., Axos Financial and Republic Bancorp go up and down completely randomly.

Pair Corralation between Axos Financial and Republic Bancorp

Allowing for the 90-day total investment horizon Axos Financial is expected to under-perform the Republic Bancorp. In addition to that, Axos Financial is 1.09 times more volatile than Republic Bancorp. It trades about -0.09 of its total potential returns per unit of risk. Republic Bancorp is currently generating about -0.07 per unit of volatility. If you would invest  6,963  in Republic Bancorp on December 28, 2024 and sell it today you would lose (518.00) from holding Republic Bancorp or give up 7.44% of portfolio value over 90 days.

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

Axos Financial  vs.  Republic 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 weak 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.

Republic Bancorp

Risk-Adjusted Performance

Very Weak

Over the last 90 days Republic Bancorp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak 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.

Pair Trading with Axos Financial and Republic Bancorp

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

The idea behind Axos Financial and Republic 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.

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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.