Correlation Between Virginia National and Axos Financial
Can any of the company-specific risk be diversified away by investing in both Virginia National 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 Virginia National and Axos Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Virginia National Bankshares and Axos Financial, you can compare the effects of market volatilities on Virginia National 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 Virginia National with a short position of Axos Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Virginia National and Axos Financial.
Diversification Opportunities for Virginia National and Axos Financial
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Virginia and Axos is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Virginia National Bankshares and Axos Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Axos Financial and Virginia National 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 Virginia National Bankshares 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 Virginia National i.e., Virginia National and Axos Financial go up and down completely randomly.
Pair Corralation between Virginia National and Axos Financial
Given the investment horizon of 90 days Virginia National is expected to generate 2.05 times less return on investment than Axos Financial. But when comparing it to its historical volatility, Virginia National Bankshares is 1.11 times less risky than Axos Financial. It trades about 0.03 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 5,186 in Axos Financial on November 9, 2024 and sell it today you would earn a total of 2,124 from holding Axos Financial or generate 40.96% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Virginia National Bankshares vs. Axos Financial
Performance |
| Timeline |
| Virginia National |
| Axos Financial |
Virginia National and Axos Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Virginia National and Axos Financial
The main advantage of trading using opposite Virginia National and Axos Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Virginia National 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.| Virginia National vs. Finward Bancorp | Virginia National vs. Community West Bancshares | Virginia National vs. First Financial Northwest | Virginia National vs. Oak Valley 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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