Correlation Between Axos Financial and BacTech Environmental

Can any of the company-specific risk be diversified away by investing in both Axos Financial and BacTech Environmental 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 BacTech Environmental into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Axos Financial and BacTech Environmental, you can compare the effects of market volatilities on Axos Financial and BacTech Environmental 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 BacTech Environmental. Check out your portfolio center. Please also check ongoing floating volatility patterns of Axos Financial and BacTech Environmental.

Diversification Opportunities for Axos Financial and BacTech Environmental

-0.78

Correlation Coefficient

Axos Financial  BacTech Environmental

Pay attention - limited upside

The 3 months correlation between Axos and BacTech is -0.78. Overlapping area represents the amount of risk that can be diversified away by holding Axos Financial and BacTech Environmental in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BacTech Environmental 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 BacTech Environmental. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BacTech Environmental has no effect on the direction of Axos Financial i.e., Axos Financial and BacTech Environmental go up and down completely randomly.

Pair Corralation between Axos Financial and BacTech Environmental

Allowing for the 90-day total investment horizon Axos Financial is expected to generate 0.39 times more return on investment than BacTech Environmental. However, Axos Financial is 2.57 times less risky than BacTech Environmental. It trades about 0.29 of its potential returns per unit of risk. BacTech Environmental is currently generating about -0.03 per unit of risk. If you would invest  6,273  in Axos Financial on April 25, 2025 and sell it today you would earn a total of  2,301  from holding Axos Financial or generate 36.68% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	98.39%
Values	Daily Returns

Axos Financial  vs.  BacTech Environmental

Axos Financial

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Axos Financial are ranked lower than 22 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Axos Financial showed solid returns over the last few months and may actually be approaching a breakup point.

BacTech Environmental

Risk-Adjusted Performance

Very Weak

Over the last 90 days BacTech Environmental has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's technical and fundamental indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with Axos Financial and BacTech Environmental

The main advantage of trading using opposite Axos Financial and BacTech Environmental positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Axos Financial position performs unexpectedly, BacTech Environmental 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 BacTech Environmental will offset losses from the drop in BacTech Environmental's long position.

The idea behind Axos Financial and BacTech Environmental 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.

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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.