Correlation Between Axos Financial and Eagle Bancorp
Can any of the company-specific risk be diversified away by investing in both Axos Financial and Eagle Bancorp 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 Eagle Bancorp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Axos Financial and Eagle Bancorp, you can compare the effects of market volatilities on Axos Financial and Eagle Bancorp 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 Eagle Bancorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Axos Financial and Eagle Bancorp.
Diversification Opportunities for Axos Financial and Eagle Bancorp
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Axos and Eagle is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Axos Financial and Eagle Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eagle 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 Eagle Bancorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eagle Bancorp has no effect on the direction of Axos Financial i.e., Axos Financial and Eagle Bancorp go up and down completely randomly.
Pair Corralation between Axos Financial and Eagle Bancorp
Allowing for the 90-day total investment horizon Axos Financial is expected to generate 1.97 times less return on investment than Eagle Bancorp. But when comparing it to its historical volatility, Axos Financial is 1.54 times less risky than Eagle Bancorp. It trades about 0.05 of its potential returns per unit of risk. Eagle Bancorp is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 2,162 in Eagle Bancorp on January 26, 2024 and sell it today you would earn a total of 65.00 from holding Eagle Bancorp or generate 3.01% 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. Eagle Bancorp
Performance |
| Timeline |
| Axos Financial |
| Eagle Bancorp |
Axos Financial and Eagle Bancorp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Axos Financial and Eagle Bancorp
The main advantage of trading using opposite Axos Financial and Eagle Bancorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Axos Financial position performs unexpectedly, Eagle Bancorp 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 Eagle Bancorp will offset losses from the drop in Eagle Bancorp'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 |
| Eagle Bancorp vs. Peoples Bancorp | Eagle Bancorp vs. Northrim BanCorp | Eagle Bancorp vs. Pacific Premier Bancorp | Eagle Bancorp vs. First Business Financial |
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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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