Correlation Between National Bank and Axos Financial
Can any of the company-specific risk be diversified away by investing in both National Bank and Axos 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 National Bank and Axos Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between National Bank Holdings and Axos Financial, you can compare the effects of market volatilities on National Bank and Axos 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 National Bank with a short position of Axos Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of National Bank and Axos Financial.
Diversification Opportunities for National Bank and Axos Financial
0.93 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between National and Axos is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding National Bank Holdings and Axos Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Axos Financial and National Bank 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 National Bank Holdings are associated (or correlated) with Axos Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Axos Financial has no effect on the direction of National Bank i.e., National Bank and Axos Financial go up and down completely randomly.
Pair Corralation between National Bank and Axos Financial
Given the investment horizon of 90 days National Bank is expected to generate 5.59 times less return on investment than Axos Financial. But when comparing it to its historical volatility, National Bank Holdings is 1.35 times less risky than Axos Financial. It trades about 0.02 of its potential returns per unit of risk. Axos Financial is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 3,928 in Axos Financial on August 23, 2024 and sell it today you would earn a total of 4,045 from holding Axos Financial or generate 102.98% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
National Bank Holdings vs. Axos Financial
Performance |
| Timeline |
| National Bank Holdings |
| Axos Financial |
National Bank and Axos Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with National Bank and Axos Financial
The main advantage of trading using opposite National Bank and Axos Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if National Bank position performs unexpectedly, Axos 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 Axos Financial will offset losses from the drop in Axos Financial's long position.| National Bank vs. First Community | National Bank vs. Community West Bancshares | National Bank vs. First Financial Northwest | National Bank vs. First Northwest Bancorp |
| Axos Financial vs. National Bank Holdings | Axos Financial vs. Community West Bancshares | Axos Financial vs. First Capital | Axos Financial vs. Home 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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