Correlation Between Axos Financial and Valley National
Can any of the company-specific risk be diversified away by investing in both Axos Financial and Valley National 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 Valley National into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Axos Financial and Valley National Bancorp, you can compare the effects of market volatilities on Axos Financial and Valley National 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 Valley National. Check out your portfolio center. Please also check ongoing floating volatility patterns of Axos Financial and Valley National.
Diversification Opportunities for Axos Financial and Valley National
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Axos and Valley is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Axos Financial and Valley National Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Valley National Bancorp 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 Valley National. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Valley National Bancorp has no effect on the direction of Axos Financial i.e., Axos Financial and Valley National go up and down completely randomly.
Pair Corralation between Axos Financial and Valley National
Allowing for the 90-day total investment horizon Axos Financial is expected to generate 1.75 times more return on investment than Valley National. However, Axos Financial is 1.75 times more volatile than Valley National Bancorp. It trades about 0.24 of its potential returns per unit of risk. Valley National Bancorp is currently generating about 0.17 per unit of risk. If you would invest 6,649 in Axos Financial on August 31, 2024 and sell it today you would earn a total of 1,729 from holding Axos Financial or generate 26.0% 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. Valley National Bancorp
Performance |
| Timeline |
| Axos Financial |
| Valley National Bancorp |
Axos Financial and Valley National Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Axos Financial and Valley National
The main advantage of trading using opposite Axos Financial and Valley National positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Axos Financial position performs unexpectedly, Valley National 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 Valley National will offset losses from the drop in Valley National'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 |
| Valley National vs. Fulton Financial | Valley National vs. Webster Financial | Valley National vs. United Bankshares | Valley National vs. FNB Corp |
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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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