Correlation Between Axos Financial and Federal Home
Can any of the company-specific risk be diversified away by investing in both Axos Financial and Federal Home 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 Federal Home into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Axos Financial and Federal Home Loan, you can compare the effects of market volatilities on Axos Financial and Federal Home 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 Federal Home. Check out your portfolio center. Please also check ongoing floating volatility patterns of Axos Financial and Federal Home.
Diversification Opportunities for Axos Financial and Federal Home
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Axos and Federal is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Axos Financial and Federal Home Loan in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Federal Home Loan 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 Federal Home. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Federal Home Loan has no effect on the direction of Axos Financial i.e., Axos Financial and Federal Home go up and down completely randomly.
Pair Corralation between Axos Financial and Federal Home
Allowing for the 90-day total investment horizon Axos Financial is expected to generate 5.43 times less return on investment than Federal Home. But when comparing it to its historical volatility, Axos Financial is 2.2 times less risky than Federal Home. It trades about 0.1 of its potential returns per unit of risk. Federal Home Loan is currently generating about 0.24 of returns per unit of risk over similar time horizon. If you would invest 116.00 in Federal Home Loan on August 24, 2024 and sell it today you would earn a total of 192.00 from holding Federal Home Loan or generate 165.52% 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. Federal Home Loan
Performance |
| Timeline |
| Axos Financial |
| Federal Home Loan |
Axos Financial and Federal Home Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Axos Financial and Federal Home
The main advantage of trading using opposite Axos Financial and Federal Home positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Axos Financial position performs unexpectedly, Federal Home 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 Federal Home will offset losses from the drop in Federal Home'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 |
| Federal Home vs. Federal National Mortgage | Federal Home vs. Federal National Mortgage | Federal Home vs. American International Group | Federal Home vs. Groupon |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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