Correlation Between Axos Financial and Bancorp
Can any of the company-specific risk be diversified away by investing in both Axos Financial and 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 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 The Bancorp, you can compare the effects of market volatilities on Axos Financial and 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 Bancorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Axos Financial and Bancorp.
Diversification Opportunities for Axos Financial and Bancorp
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Axos and Bancorp is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Axos Financial and The Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on 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 Bancorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bancorp has no effect on the direction of Axos Financial i.e., Axos Financial and Bancorp go up and down completely randomly.
Pair Corralation between Axos Financial and Bancorp
Allowing for the 90-day total investment horizon Axos Financial is expected to generate 1.0 times more return on investment than Bancorp. However, Axos Financial is 1.0 times more volatile than The Bancorp. It trades about 0.07 of its potential returns per unit of risk. The Bancorp is currently generating about 0.06 per unit of risk. If you would invest 3,680 in Axos Financial on September 10, 2024 and sell it today you would earn a total of 4,405 from holding Axos Financial or generate 119.7% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
Axos Financial vs. The Bancorp
Performance |
Timeline |
Axos Financial |
Bancorp |
Axos Financial and Bancorp Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Axos Financial and Bancorp
The main advantage of trading using opposite Axos Financial and Bancorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Axos Financial position performs unexpectedly, 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 Bancorp will offset losses from the drop in Bancorp's long position.Axos Financial vs. JPMorgan Chase Co | Axos Financial vs. Citigroup | Axos Financial vs. Wells Fargo | Axos Financial vs. Toronto Dominion Bank |
Bancorp vs. Heartland Financial USA | Bancorp vs. Heritage Commerce Corp | Bancorp vs. Business First Bancshares | Bancorp vs. German American Bancorp |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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