Correlation Between Axos Financial and Root

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Can any of the company-specific risk be diversified away by investing in both Axos Financial and Root 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 Root into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Axos Financial and Root Inc, you can compare the effects of market volatilities on Axos Financial and Root 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 Root. Check out your portfolio center. Please also check ongoing floating volatility patterns of Axos Financial and Root.

Diversification Opportunities for Axos Financial and Root

-0.42
  Correlation Coefficient

Very good diversification

The 3 months correlation between Axos and Root is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding Axos Financial and Root Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Root Inc 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 Root. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Root Inc has no effect on the direction of Axos Financial i.e., Axos Financial and Root go up and down completely randomly.

Pair Corralation between Axos Financial and Root

Allowing for the 90-day total investment horizon Axos Financial is expected to generate 0.47 times more return on investment than Root. However, Axos Financial is 2.11 times less risky than Root. It trades about 0.31 of its potential returns per unit of risk. Root Inc is currently generating about 0.01 per unit of risk. If you would invest  6,099  in Axos Financial on April 22, 2025 and sell it today you would earn a total of  2,454  from holding Axos Financial or generate 40.24% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

Axos Financial  vs.  Root Inc

 Performance 
       Timeline  
Axos Financial 

Risk-Adjusted Performance

Solid

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in Axos Financial are ranked lower than 24 (%) 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.
Root Inc 

Risk-Adjusted Performance

Insignificant

 
Weak
 
Strong
Over the last 90 days Root Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Root is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Axos Financial and Root Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Axos Financial and Root

The main advantage of trading using opposite Axos Financial and Root positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Axos Financial position performs unexpectedly, Root 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 Root will offset losses from the drop in Root's long position.
The idea behind Axos Financial and Root Inc 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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.

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