Correlation Between Axos Financial and BankFinancial
Can any of the company-specific risk be diversified away by investing in both Axos Financial and BankFinancial 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 BankFinancial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Axos Financial and BankFinancial, you can compare the effects of market volatilities on Axos Financial and BankFinancial 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 BankFinancial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Axos Financial and BankFinancial.
Diversification Opportunities for Axos Financial and BankFinancial
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Axos and BankFinancial is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Axos Financial and BankFinancial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BankFinancial 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 BankFinancial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BankFinancial has no effect on the direction of Axos Financial i.e., Axos Financial and BankFinancial go up and down completely randomly.
Pair Corralation between Axos Financial and BankFinancial
Allowing for the 90-day total investment horizon Axos Financial is expected to generate 1.65 times more return on investment than BankFinancial. However, Axos Financial is 1.65 times more volatile than BankFinancial. It trades about 0.14 of its potential returns per unit of risk. BankFinancial is currently generating about 0.13 per unit of risk. If you would invest 5,409 in Axos Financial on August 28, 2024 and sell it today you would earn a total of 3,251 from holding Axos Financial or generate 60.1% 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. BankFinancial
Performance |
| Timeline |
| Axos Financial |
| BankFinancial |
Axos Financial and BankFinancial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Axos Financial and BankFinancial
The main advantage of trading using opposite Axos Financial and BankFinancial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Axos Financial position performs unexpectedly, BankFinancial 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 BankFinancial will offset losses from the drop in BankFinancial's long position.| Axos Financial vs. Fifth Third Bancorp | Axos Financial vs. Huntington Bancshares Incorporated | Axos Financial vs. MT Bank |
| BankFinancial vs. First Business Financial | BankFinancial vs. Old Point Financial | BankFinancial vs. Parke Bancorp | BankFinancial vs. Community West Bancshares |
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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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