Correlation Between Axos Financial and Enterprise Bancorp
Can any of the company-specific risk be diversified away by investing in both Axos Financial and Enterprise Bancorp 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 Enterprise Bancorp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Axos Financial and Enterprise Bancorp, you can compare the effects of market volatilities on Axos Financial and Enterprise Bancorp 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 Enterprise Bancorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Axos Financial and Enterprise Bancorp.
Diversification Opportunities for Axos Financial and Enterprise Bancorp
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Axos and Enterprise is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Axos Financial and Enterprise Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Enterprise Bancorp 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 Enterprise Bancorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Enterprise Bancorp has no effect on the direction of Axos Financial i.e., Axos Financial and Enterprise Bancorp go up and down completely randomly.
Pair Corralation between Axos Financial and Enterprise Bancorp
Allowing for the 90-day total investment horizon Axos Financial is expected to generate 0.89 times more return on investment than Enterprise Bancorp. However, Axos Financial is 1.12 times less risky than Enterprise Bancorp. It trades about -0.01 of its potential returns per unit of risk. Enterprise Bancorp is currently generating about -0.09 per unit of risk. If you would invest 4,923 in Axos Financial on January 18, 2024 and sell it today you would lose (37.00) from holding Axos Financial or give up 0.75% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Axos Financial vs. Enterprise Bancorp
Performance |
| Timeline |
| Axos Financial |
| Enterprise Bancorp |
Axos Financial and Enterprise Bancorp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Axos Financial and Enterprise Bancorp
The main advantage of trading using opposite Axos Financial and Enterprise Bancorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Axos Financial position performs unexpectedly, Enterprise Bancorp 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 Enterprise Bancorp will offset losses from the drop in Enterprise Bancorp's long position.| Axos Financial vs. National Bank Holdings | Axos Financial vs. Community West Bancshares | Axos Financial vs. First Capital | Axos Financial vs. BCB Bancorp |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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