Correlation Between Axos Financial and ESSA Bancorp
Can any of the company-specific risk be diversified away by investing in both Axos Financial and ESSA 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 ESSA 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 ESSA Bancorp, you can compare the effects of market volatilities on Axos Financial and ESSA 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 ESSA Bancorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Axos Financial and ESSA Bancorp.
Diversification Opportunities for Axos Financial and ESSA Bancorp
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Axos and ESSA is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Axos Financial and ESSA Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ESSA 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 ESSA Bancorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ESSA Bancorp has no effect on the direction of Axos Financial i.e., Axos Financial and ESSA Bancorp go up and down completely randomly.
Pair Corralation between Axos Financial and ESSA Bancorp
Allowing for the 90-day total investment horizon Axos Financial is expected to generate 1.77 times more return on investment than ESSA Bancorp. However, Axos Financial is 1.77 times more volatile than ESSA Bancorp. It trades about 0.23 of its potential returns per unit of risk. ESSA Bancorp is currently generating about 0.04 per unit of risk. If you would invest 6,559 in Axos Financial on August 23, 2024 and sell it today you would earn a total of 1,653 from holding Axos Financial or generate 25.2% 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. ESSA Bancorp
Performance |
| Timeline |
| Axos Financial |
| ESSA Bancorp |
Axos Financial and ESSA Bancorp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Axos Financial and ESSA Bancorp
The main advantage of trading using opposite Axos Financial and ESSA Bancorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Axos Financial position performs unexpectedly, ESSA 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 ESSA Bancorp will offset losses from the drop in ESSA Bancorp'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 |
| ESSA Bancorp vs. Community West Bancshares | ESSA Bancorp vs. First Northwest Bancorp | ESSA Bancorp vs. First Community | ESSA Bancorp vs. Oak Valley 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
Other Complementary Tools
| Piotroski F Score Get Piotroski F Score based on the binary analysis strategy of nine different fundamentals | |
| Companies Directory Evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals | |
| Portfolio Comparator Compare the composition, asset allocations and performance of any two portfolios in your account | |
| Idea Breakdown Analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes | |
| Bond Analysis Evaluate and analyze corporate bonds as a potential investment for your portfolios. |