Correlation Between Axos Financial and First Community
Can any of the company-specific risk be diversified away by investing in both Axos Financial and First Community 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 Community 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 Community Bancshares, you can compare the effects of market volatilities on Axos Financial and First Community 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 Community. Check out your portfolio center. Please also check ongoing floating volatility patterns of Axos Financial and First Community.
Diversification Opportunities for Axos Financial and First Community
0.9 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Axos and First is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Axos Financial and First Community Bancshares in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Community Banc 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 Community. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Community Banc has no effect on the direction of Axos Financial i.e., Axos Financial and First Community go up and down completely randomly.
Pair Corralation between Axos Financial and First Community
Allowing for the 90-day total investment horizon Axos Financial is expected to generate 1.27 times more return on investment than First Community. However, Axos Financial is 1.27 times more volatile than First Community Bancshares. It trades about 0.24 of its potential returns per unit of risk. First Community Bancshares is currently generating about 0.14 per unit of risk. If you would invest 6,630 in Axos Financial on August 30, 2024 and sell it today you would earn a total of 1,748 from holding Axos Financial or generate 26.37% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Axos Financial vs. First Community Bancshares
Performance |
| Timeline |
| Axos Financial |
| First Community Banc |
Axos Financial and First Community Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Axos Financial and First Community
The main advantage of trading using opposite Axos Financial and First Community positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Axos Financial position performs unexpectedly, First Community 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 Community will offset losses from the drop in First Community'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 |
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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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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