Correlation Between Axos Financial and National Bankshares
Can any of the company-specific risk be diversified away by investing in both Axos Financial and National Bankshares 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 National Bankshares into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Axos Financial and National Bankshares, you can compare the effects of market volatilities on Axos Financial and National Bankshares 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 National Bankshares. Check out your portfolio center. Please also check ongoing floating volatility patterns of Axos Financial and National Bankshares.
Diversification Opportunities for Axos Financial and National Bankshares
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Axos and National is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Axos Financial and National Bankshares in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on National Bankshares 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 National Bankshares. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of National Bankshares has no effect on the direction of Axos Financial i.e., Axos Financial and National Bankshares go up and down completely randomly.
Pair Corralation between Axos Financial and National Bankshares
Allowing for the 90-day total investment horizon Axos Financial is expected to generate 1.88 times more return on investment than National Bankshares. However, Axos Financial is 1.88 times more volatile than National Bankshares. It trades about 0.26 of its potential returns per unit of risk. National Bankshares is currently generating about 0.13 per unit of risk. If you would invest 6,564 in Axos Financial on August 24, 2024 and sell it today you would earn a total of 1,902 from holding Axos Financial or generate 28.98% 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. National Bankshares
Performance |
| Timeline |
| Axos Financial |
| National Bankshares |
Axos Financial and National Bankshares Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Axos Financial and National Bankshares
The main advantage of trading using opposite Axos Financial and National Bankshares positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Axos Financial position performs unexpectedly, National Bankshares 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 National Bankshares will offset losses from the drop in National Bankshares' long position.| Axos Financial vs. National Bank Holdings | Axos Financial vs. Community West Bancshares | Axos Financial vs. First Capital | Axos Financial vs. Home Bancorp |
| National Bankshares vs. Finward Bancorp | National Bankshares vs. Community West Bancshares | National Bankshares vs. First Financial Northwest | National Bankshares 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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