Correlation Between Axos Financial and Southern California
Can any of the company-specific risk be diversified away by investing in both Axos Financial and Southern California 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 Southern California into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Axos Financial and Southern California Bancorp, you can compare the effects of market volatilities on Axos Financial and Southern California 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 Southern California. Check out your portfolio center. Please also check ongoing floating volatility patterns of Axos Financial and Southern California.
Diversification Opportunities for Axos Financial and Southern California
0.97 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Axos and Southern is 0.97. Overlapping area represents the amount of risk that can be diversified away by holding Axos Financial and Southern California Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Southern California 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 Southern California. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Southern California has no effect on the direction of Axos Financial i.e., Axos Financial and Southern California go up and down completely randomly.
Pair Corralation between Axos Financial and Southern California
Allowing for the 90-day total investment horizon Axos Financial is expected to under-perform the Southern California. In addition to that, Axos Financial is 2.04 times more volatile than Southern California Bancorp. It trades about -0.01 of its total potential returns per unit of risk. Southern California Bancorp is currently generating about 0.23 per unit of volatility. If you would invest 1,680 in Southern California Bancorp on September 7, 2024 and sell it today you would earn a total of 84.00 from holding Southern California Bancorp or generate 5.0% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Strong |
Accuracy | 100.0% |
Values | Daily Returns |
Axos Financial vs. Southern California Bancorp
Performance |
Timeline |
Axos Financial |
Southern California |
Axos Financial and Southern California Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Axos Financial and Southern California
The main advantage of trading using opposite Axos Financial and Southern California positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Axos Financial position performs unexpectedly, Southern California 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 Southern California will offset losses from the drop in Southern California'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 |
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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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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