Correlation Between Axos Financial and Bank of Marin
Can any of the company-specific risk be diversified away by investing in both Axos Financial and Bank of Marin 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 Bank of Marin into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Axos Financial and Bank of Marin, you can compare the effects of market volatilities on Axos Financial and Bank of Marin 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 Bank of Marin. Check out your portfolio center. Please also check ongoing floating volatility patterns of Axos Financial and Bank of Marin.
Diversification Opportunities for Axos Financial and Bank of Marin
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Axos and Bank is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Axos Financial and Bank of Marin in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bank of Marin 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 Bank of Marin. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bank of Marin has no effect on the direction of Axos Financial i.e., Axos Financial and Bank of Marin go up and down completely randomly.
Pair Corralation between Axos Financial and Bank of Marin
Allowing for the 90-day total investment horizon Axos Financial is expected to under-perform the Bank of Marin. But the stock apears to be less risky and, when comparing its historical volatility, Axos Financial is 1.43 times less risky than Bank of Marin. The stock trades about -0.1 of its potential returns per unit of risk. The Bank of Marin is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest 2,347 in Bank of Marin on November 21, 2024 and sell it today you would earn a total of 172.00 from holding Bank of Marin or generate 7.33% 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. Bank of Marin
Performance |
Timeline |
Axos Financial |
Bank of Marin |
Axos Financial and Bank of Marin Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Axos Financial and Bank of Marin
The main advantage of trading using opposite Axos Financial and Bank of Marin positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Axos Financial position performs unexpectedly, Bank of Marin 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 Bank of Marin will offset losses from the drop in Bank of Marin's long position.Axos Financial vs. National Bank Holdings | ||
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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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