Correlation Between Axos Financial and Texas Capital
Can any of the company-specific risk be diversified away by investing in both Axos Financial and Texas Capital 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 Texas Capital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Axos Financial and Texas Capital Bancshares, you can compare the effects of market volatilities on Axos Financial and Texas Capital 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 Texas Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Axos Financial and Texas Capital.
Diversification Opportunities for Axos Financial and Texas Capital
0.4 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Axos and Texas is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Axos Financial and Texas Capital Bancshares in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Texas Capital Bancshares 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 Texas Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Texas Capital Bancshares has no effect on the direction of Axos Financial i.e., Axos Financial and Texas Capital go up and down completely randomly.
Pair Corralation between Axos Financial and Texas Capital
Allowing for the 90-day total investment horizon Axos Financial is expected to generate 1.51 times more return on investment than Texas Capital. However, Axos Financial is 1.51 times more volatile than Texas Capital Bancshares. It trades about 0.19 of its potential returns per unit of risk. Texas Capital Bancshares is currently generating about 0.09 per unit of risk. If you would invest 5,153 in Axos Financial on February 7, 2024 and sell it today you would earn a total of 600.00 from holding Axos Financial or generate 11.64% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Axos Financial vs. Texas Capital Bancshares
Performance |
Timeline |
Axos Financial |
Texas Capital Bancshares |
Axos Financial and Texas Capital Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Axos Financial and Texas Capital
The main advantage of trading using opposite Axos Financial and Texas Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Axos Financial position performs unexpectedly, Texas Capital 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 Texas Capital will offset losses from the drop in Texas Capital's long position.Axos Financial vs. Home Federal Bancorp | Axos Financial vs. Community West Bancshares | Axos Financial vs. Cullman Bancorp | Axos Financial vs. First Financial Northwest |
Texas Capital vs. Northfield Bancorp | Texas Capital vs. FNB Inc | Texas Capital vs. Mifflinburg Bancorp | Texas Capital vs. Commercial National 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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