Correlation Between Axos Financial and Natwest Group
Can any of the company-specific risk be diversified away by investing in both Axos Financial and Natwest Group 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 Natwest Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Axos Financial and Natwest Group PLC, you can compare the effects of market volatilities on Axos Financial and Natwest Group 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 Natwest Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Axos Financial and Natwest Group.
Diversification Opportunities for Axos Financial and Natwest Group
-0.51 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Axos and Natwest is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding Axos Financial and Natwest Group PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Natwest Group PLC 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 Natwest Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Natwest Group PLC has no effect on the direction of Axos Financial i.e., Axos Financial and Natwest Group go up and down completely randomly.
Pair Corralation between Axos Financial and Natwest Group
Allowing for the 90-day total investment horizon Axos Financial is expected to under-perform the Natwest Group. But the stock apears to be less risky and, when comparing its historical volatility, Axos Financial is 1.05 times less risky than Natwest Group. The stock trades about -0.18 of its potential returns per unit of risk. The Natwest Group PLC is currently generating about -0.07 of returns per unit of risk over similar time horizon. If you would invest 1,108 in Natwest Group PLC on January 8, 2025 and sell it today you would lose (51.00) from holding Natwest Group PLC or give up 4.6% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Axos Financial vs. Natwest Group PLC
Performance |
| Timeline |
| Axos Financial |
| Natwest Group PLC |
Axos Financial and Natwest Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Axos Financial and Natwest Group
The main advantage of trading using opposite Axos Financial and Natwest Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Axos Financial position performs unexpectedly, Natwest Group 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 Natwest Group will offset losses from the drop in Natwest Group'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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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