Correlation Between Better Home and Axos Financial

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

By analyzing existing cross correlation between Better Home Finance and Axos Financial, you can compare the effects of market volatilities on Better Home and Axos Financial 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 Better Home with a short position of Axos Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Better Home and Axos Financial.

Diversification Opportunities for Better Home and Axos Financial

0.21

Correlation Coefficient

Better Home  Axos Financial

Modest diversification

The 3 months correlation between Better and Axos is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Better Home Finance and Axos Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Axos Financial and Better Home 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 Better Home Finance are associated (or correlated) with Axos Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Axos Financial has no effect on the direction of Better Home i.e., Better Home and Axos Financial go up and down completely randomly.

Pair Corralation between Better Home and Axos Financial

Assuming the 90 days horizon Better Home Finance is expected to generate 4.92 times more return on investment than Axos Financial. However, Better Home is 4.92 times more volatile than Axos Financial. It trades about 0.2 of its potential returns per unit of risk. Axos Financial is currently generating about 0.13 per unit of risk. If you would invest  6.10  in Better Home Finance on September 13, 2024 and sell it today you would earn a total of  4.90  from holding Better Home Finance or generate 80.33% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	50.79%
Values	Daily Returns

Better Home Finance  vs.  Axos Financial

Better Home Finance

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Better Home Finance are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unsteady basic indicators, Better Home showed solid returns over the last few months and may actually be approaching a breakup point.

Axos Financial

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Axos Financial are ranked lower than 10 (%) 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.

Pair Trading with Better Home and Axos Financial

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

The idea behind Better Home Finance and Axos Financial 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.