Correlation Between Axos Financial and First Bancshares
Can any of the company-specific risk be diversified away by investing in both Axos Financial and First Bancshares 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 First Bancshares into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Axos Financial and First Bancshares, you can compare the effects of market volatilities on Axos Financial and First Bancshares 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 First Bancshares. Check out your portfolio center. Please also check ongoing floating volatility patterns of Axos Financial and First Bancshares.
Diversification Opportunities for Axos Financial and First Bancshares
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Axos and First is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Axos Financial and First Bancshares in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Bancshares 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 First Bancshares. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Bancshares has no effect on the direction of Axos Financial i.e., Axos Financial and First Bancshares go up and down completely randomly.
Pair Corralation between Axos Financial and First Bancshares
Allowing for the 90-day total investment horizon Axos Financial is expected to generate 1.41 times less return on investment than First Bancshares. In addition to that, Axos Financial is 2.09 times more volatile than First Bancshares. It trades about 0.08 of its total potential returns per unit of risk. First Bancshares is currently generating about 0.23 per unit of volatility. If you would invest 2,065 in First Bancshares on August 31, 2024 and sell it today you would earn a total of 210.00 from holding First Bancshares or generate 10.17% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 8.56% |
| Values | Daily Returns |
Axos Financial vs. First Bancshares
Performance |
| Timeline |
| Axos Financial |
| First Bancshares |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Axos Financial and First Bancshares Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Axos Financial and First Bancshares
The main advantage of trading using opposite Axos Financial and First Bancshares positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Axos Financial position performs unexpectedly, First Bancshares 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 First Bancshares will offset losses from the drop in First Bancshares' long position.| Axos Financial vs. National Bank Holdings | Axos Financial vs. Community West Bancshares | Axos Financial vs. First Capital | Axos Financial vs. Home Bancorp |
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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 CEOs Directory module to screen CEOs from public companies around the world.
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