Correlation Between Axos Financial and Hercules Capital

Can any of the company-specific risk be diversified away by investing in both Axos Financial and Hercules 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 Hercules 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 Hercules Capital, you can compare the effects of market volatilities on Axos Financial and Hercules 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 Hercules Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Axos Financial and Hercules Capital.

Diversification Opportunities for Axos Financial and Hercules Capital

0.85

Correlation Coefficient

Axos Financial  Hercules Capital

Very poor diversification

The 3 months correlation between Axos and Hercules is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Axos Financial and Hercules Capital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hercules Capital 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 Hercules Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hercules Capital has no effect on the direction of Axos Financial i.e., Axos Financial and Hercules Capital go up and down completely randomly.

Pair Corralation between Axos Financial and Hercules Capital

Allowing for the 90-day total investment horizon Axos Financial is expected to generate 2.31 times less return on investment than Hercules Capital. In addition to that, Axos Financial is 1.76 times more volatile than Hercules Capital. It trades about 0.02 of its total potential returns per unit of risk. Hercules Capital is currently generating about 0.07 per unit of volatility. If you would invest  1,823  in Hercules Capital on July 3, 2025 and sell it today you would earn a total of  68.00  from holding Hercules Capital or generate 3.73% return on investment over 90 days.

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

Axos Financial  vs.  Hercules Capital

Axos Financial

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Axos Financial are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong basic indicators, Axos Financial is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Hercules Capital

Risk-Adjusted Performance

Mild

Compared to the overall equity markets, risk-adjusted returns on investments in Hercules Capital are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound technical and fundamental indicators, Hercules Capital is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Axos Financial and Hercules Capital

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

The idea behind Axos Financial and Hercules Capital 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.