Correlation Between Axos Financial and East West
Can any of the company-specific risk be diversified away by investing in both Axos Financial and East West 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 East West into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Axos Financial and East West Bancorp, you can compare the effects of market volatilities on Axos Financial and East West 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 East West. Check out your portfolio center. Please also check ongoing floating volatility patterns of Axos Financial and East West.
Diversification Opportunities for Axos Financial and East West
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Axos and East is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Axos Financial and East West Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on East West 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 East West. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of East West Bancorp has no effect on the direction of Axos Financial i.e., Axos Financial and East West go up and down completely randomly.
Pair Corralation between Axos Financial and East West
Allowing for the 90-day total investment horizon Axos Financial is expected to generate 1.6 times more return on investment than East West. However, Axos Financial is 1.6 times more volatile than East West Bancorp. It trades about 0.23 of its potential returns per unit of risk. East West Bancorp is currently generating about 0.27 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 | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Axos Financial vs. East West Bancorp
Performance |
| Timeline |
| Axos Financial |
| East West Bancorp |
Axos Financial and East West Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Axos Financial and East West
The main advantage of trading using opposite Axos Financial and East West positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Axos Financial position performs unexpectedly, East West 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 East West will offset losses from the drop in East West'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 |
| East West vs. Barclays PLC ADR | East West vs. UBS Group AG | East West vs. ING Group NV | East West vs. Citigroup |
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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
Other Complementary Tools
| Portfolio Optimization Compute new portfolio that will generate highest expected return given your specified tolerance for risk | |
| Price Transformation Use Price Transformation models to analyze the depth of different equity instruments across global markets | |
| Portfolio Center All portfolio management and optimization tools to improve performance of your portfolios | |
| Portfolio Suggestion Get suggestions outside of your existing asset allocation including your own model portfolios | |
| Portfolio Volatility Check portfolio volatility and analyze historical return density to properly model market risk |