Correlation Between Axos Financial and DNB Financial

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Can any of the company-specific risk be diversified away by investing in both Axos Financial and DNB 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 DNB 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 DNB Financial, you can compare the effects of market volatilities on Axos Financial and DNB 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 DNB Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Axos Financial and DNB Financial.

Diversification Opportunities for Axos Financial and DNB Financial

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  Correlation Coefficient

Pay attention - limited upside

The 3 months correlation between Axos and DNB is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Axos Financial and DNB Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DNB 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 DNB Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DNB Financial has no effect on the direction of Axos Financial i.e., Axos Financial and DNB Financial go up and down completely randomly.

Pair Corralation between Axos Financial and DNB Financial

If you would invest  5,169  in Axos Financial on December 30, 2023 and sell it today you would earn a total of  235.00  from holding Axos Financial or generate 4.55% return on investment over 90 days.
Time Period3 Months [change]
DirectionFlat 
StrengthInsignificant
Accuracy0.0%
ValuesDaily Returns

Axos Financial  vs.  DNB Financial

 Performance 
       Timeline  
Axos Financial 

Risk-Adjusted Performance

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Over the last 90 days Axos Financial has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Axos Financial is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.
DNB Financial 

Risk-Adjusted Performance

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Very Weak
Over the last 90 days DNB Financial has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable fundamental drivers, DNB Financial is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Axos Financial and DNB Financial Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Axos Financial and DNB Financial

The main advantage of trading using opposite Axos Financial and DNB Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Axos Financial position performs unexpectedly, DNB 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 DNB Financial will offset losses from the drop in DNB Financial's long position.
The idea behind Axos Financial and DNB Financial pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.

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