Correlation Between Axos Financial and Everest

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

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

Diversification Opportunities for Axos Financial and Everest

-0.29

Correlation Coefficient

Axos Financial  Everest

Very good diversification

The 3 months correlation between Axos and Everest is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding Axos Financial and Everest Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Everest Group 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 Everest. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Everest Group has no effect on the direction of Axos Financial i.e., Axos Financial and Everest go up and down completely randomly.

Pair Corralation between Axos Financial and Everest

Allowing for the 90-day total investment horizon Axos Financial is expected to generate 1.77 times more return on investment than Everest. However, Axos Financial is 1.77 times more volatile than Everest Group. It trades about 0.11 of its potential returns per unit of risk. Everest Group is currently generating about 0.0 per unit of risk. If you would invest  6,815  in Axos Financial on September 1, 2024 and sell it today you would earn a total of  1,470  from holding Axos Financial or generate 21.57% return on investment over 90 days.

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

Axos Financial  vs.  Everest Group

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.

Everest Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Everest Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable technical and fundamental indicators, Everest is not utilizing all of its potentials. The recent stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Axos Financial and Everest

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

The idea behind Axos Financial and Everest Group 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.