Correlation Between Axos Financial and Provident Financial
Can any of the company-specific risk be diversified away by investing in both Axos Financial and Provident Financial 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 Provident Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Axos Financial and Provident Financial Holdings, you can compare the effects of market volatilities on Axos Financial and Provident Financial 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 Provident Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Axos Financial and Provident Financial.
Diversification Opportunities for Axos Financial and Provident Financial
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Axos and Provident is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Axos Financial and Provident Financial Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Provident Financial 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 Provident Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Provident Financial has no effect on the direction of Axos Financial i.e., Axos Financial and Provident Financial go up and down completely randomly.
Pair Corralation between Axos Financial and Provident Financial
Allowing for the 90-day total investment horizon Axos Financial is expected to generate 1.74 times more return on investment than Provident Financial. However, Axos Financial is 1.74 times more volatile than Provident Financial Holdings. It trades about 0.08 of its potential returns per unit of risk. Provident Financial Holdings is currently generating about 0.06 per unit of risk. If you would invest 4,059 in Axos Financial on September 2, 2024 and sell it today you would earn a total of 4,226 from holding Axos Financial or generate 104.11% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.73% |
| Values | Daily Returns |
Axos Financial vs. Provident Financial Holdings
Performance |
| Timeline |
| Axos Financial |
| Provident Financial |
Axos Financial and Provident Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Axos Financial and Provident Financial
The main advantage of trading using opposite Axos Financial and Provident Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Axos Financial position performs unexpectedly, Provident Financial 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 Provident Financial will offset losses from the drop in Provident Financial'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 |
| Provident Financial vs. Home Federal Bancorp | Provident Financial vs. Magyar Bancorp | Provident Financial vs. Community West Bancshares | Provident Financial vs. First Northwest 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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