Correlation Between Topbuild Corp and Axos Financial
Can any of the company-specific risk be diversified away by investing in both Topbuild Corp 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 Topbuild Corp and Axos Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Topbuild Corp and Axos Financial, you can compare the effects of market volatilities on Topbuild Corp 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 Topbuild Corp with a short position of Axos Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Topbuild Corp and Axos Financial.
Diversification Opportunities for Topbuild Corp and Axos Financial
-0.38 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Topbuild and Axos is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding Topbuild Corp and Axos Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Axos Financial and Topbuild Corp 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 Topbuild Corp 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 Topbuild Corp i.e., Topbuild Corp and Axos Financial go up and down completely randomly.
Pair Corralation between Topbuild Corp and Axos Financial
Considering the 90-day investment horizon Topbuild Corp is expected to under-perform the Axos Financial. In addition to that, Topbuild Corp is 1.05 times more volatile than Axos Financial. It trades about -0.1 of its total potential returns per unit of risk. Axos Financial is currently generating about -0.09 per unit of volatility. If you would invest 5,078 in Axos Financial on January 19, 2024 and sell it today you would lose (192.00) from holding Axos Financial or give up 3.78% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Topbuild Corp vs. Axos Financial
Performance |
| Timeline |
| Topbuild Corp |
| Axos Financial |
Topbuild Corp and Axos Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Topbuild Corp and Axos Financial
The main advantage of trading using opposite Topbuild Corp and Axos Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Topbuild Corp 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.| Topbuild Corp vs. Api GroupCorp | Topbuild Corp vs. MYR Group | Topbuild Corp vs. Comfort Systems USA | Topbuild Corp vs. Construction Partners |
| 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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