Correlation Between Axos Financial and Richmond Mutual

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

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

Diversification Opportunities for Axos Financial and Richmond Mutual

0.72

Correlation Coefficient

Axos Financial  Richmond Mutual

Poor diversification

The 3 months correlation between Axos and Richmond is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Axos Financial and Richmond Mutual Bancorp. in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Richmond Mutual Banc 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 Richmond Mutual. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Richmond Mutual Banc has no effect on the direction of Axos Financial i.e., Axos Financial and Richmond Mutual go up and down completely randomly.

Pair Corralation between Axos Financial and Richmond Mutual

Allowing for the 90-day total investment horizon Axos Financial is expected to under-perform the Richmond Mutual. But the stock apears to be less risky and, when comparing its historical volatility, Axos Financial is 1.11 times less risky than Richmond Mutual. The stock trades about -0.08 of its potential returns per unit of risk. The Richmond Mutual Bancorporation is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest  1,357  in Richmond Mutual Bancorporation on December 27, 2024 and sell it today you would lose (38.00) from holding Richmond Mutual Bancorporation or give up 2.8% of portfolio value over 90 days.

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

Axos Financial  vs.  Richmond Mutual 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.

Richmond Mutual Banc

Risk-Adjusted Performance

Very Weak

Over the last 90 days Richmond Mutual Bancorporation has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong fundamental drivers, Richmond Mutual is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Axos Financial and Richmond Mutual

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

The idea behind Axos Financial and Richmond Mutual Bancorporation 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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.