Correlation Between Axos Financial and First Interstate

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

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

Diversification Opportunities for Axos Financial and First Interstate

0.66

Correlation Coefficient

Axos Financial  First Interstate

Poor diversification

The 3 months correlation between Axos and First is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Axos Financial and First Interstate BancSystem in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Interstate Ban 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 First Interstate. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Interstate Ban has no effect on the direction of Axos Financial i.e., Axos Financial and First Interstate go up and down completely randomly.

Pair Corralation between Axos Financial and First Interstate

Allowing for the 90-day total investment horizon Axos Financial is expected to generate 0.88 times more return on investment than First Interstate. However, Axos Financial is 1.14 times less risky than First Interstate. It trades about 0.13 of its potential returns per unit of risk. First Interstate BancSystem is currently generating about 0.02 per unit of risk. If you would invest  6,452  in Axos Financial on March 30, 2025 and sell it today you would earn a total of  1,233  from holding Axos Financial or generate 19.11% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Axos Financial  vs.  First Interstate BancSystem

Axos Financial

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Axos Financial are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unsteady basic indicators, Axos Financial showed solid returns over the last few months and may actually be approaching a breakup point.

First Interstate Ban

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in First Interstate BancSystem are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent fundamental drivers, First Interstate is not utilizing all of its potentials. The recent stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Axos Financial and First Interstate

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

The idea behind Axos Financial and First Interstate BancSystem 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.

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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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.