Correlation Between Axos Financial and Arrow Financial
Can any of the company-specific risk be diversified away by investing in both Axos Financial and Arrow 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 Axos Financial and Arrow Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Axos Financial and Arrow Financial, you can compare the effects of market volatilities on Axos Financial and Arrow 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 Axos Financial with a short position of Arrow Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Axos Financial and Arrow Financial.
Diversification Opportunities for Axos Financial and Arrow Financial
0.9 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Axos and Arrow is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Axos Financial and Arrow Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Arrow Financial 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 Arrow Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Arrow Financial has no effect on the direction of Axos Financial i.e., Axos Financial and Arrow Financial go up and down completely randomly.
Pair Corralation between Axos Financial and Arrow Financial
Allowing for the 90-day total investment horizon Axos Financial is expected to generate 1.12 times more return on investment than Arrow Financial. However, Axos Financial is 1.12 times more volatile than Arrow Financial. It trades about 0.05 of its potential returns per unit of risk. Arrow Financial is currently generating about -0.12 per unit of risk. If you would invest 6,882 in Axos Financial on November 3, 2024 and sell it today you would earn a total of 111.00 from holding Axos Financial or generate 1.61% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Axos Financial vs. Arrow Financial
Performance |
| Timeline |
| Axos Financial |
| Arrow Financial |
Axos Financial and Arrow Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Axos Financial and Arrow Financial
The main advantage of trading using opposite Axos Financial and Arrow Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Axos Financial position performs unexpectedly, Arrow 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 Arrow Financial will offset losses from the drop in Arrow Financial's long position.| Axos Financial vs. National Bank Holdings | Axos Financial vs. Community West Bancshares | Axos Financial vs. First Capital | Axos Financial vs. Home Bancorp |
| Arrow Financial vs. Heritage Commerce Corp | Arrow Financial vs. Westamerica Bancorporation | Arrow Financial vs. Heritage Financial | Arrow Financial vs. National Bankshares |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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