Correlation Between Silvergate Capital and Axos Financial

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

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

Diversification Opportunities for Silvergate Capital and Axos Financial

-0.7

Correlation Coefficient

Silvergate Capital  Axos Financial

Excellent diversification

The 3 months correlation between Silvergate and Axos is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding Silvergate Capital and Axos Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Axos Financial and Silvergate Capital 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 Silvergate Capital 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 Silvergate Capital i.e., Silvergate Capital and Axos Financial go up and down completely randomly.

Pair Corralation between Silvergate Capital and Axos Financial

If you would invest  6,717  in Axos Financial on September 4, 2024 and sell it today you would earn a total of  1,366  from holding Axos Financial or generate 20.34% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	1.56%
Values	Daily Returns

Silvergate Capital  vs.  Axos Financial

Silvergate Capital

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Silvergate Capital has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong forward indicators, Silvergate Capital is not utilizing all of its potentials. The latest stock price confusion, may contribute to short-horizon losses for the traders.

Axos Financial

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Axos Financial are ranked lower than 8 (%) 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 Silvergate Capital and Axos Financial

The main advantage of trading using opposite Silvergate Capital and Axos Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Silvergate Capital 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 Silvergate Capital 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.

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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.