Correlation Between Axos Financial and Farmers

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

Diversification Opportunities for Axos Financial and Farmers

0.16
  Correlation Coefficient

Average diversification

The 3 months correlation between Axos and Farmers is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding Axos Financial and Farmers And Merchants in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Farmers And Merchants 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 Farmers. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Farmers And Merchants has no effect on the direction of Axos Financial i.e., Axos Financial and Farmers go up and down completely randomly.

Pair Corralation between Axos Financial and Farmers

Allowing for the 90-day total investment horizon Axos Financial is expected to generate 0.77 times more return on investment than Farmers. However, Axos Financial is 1.3 times less risky than Farmers. It trades about 0.03 of its potential returns per unit of risk. Farmers And Merchants is currently generating about 0.0 per unit of risk. If you would invest  4,031  in Axos Financial on December 30, 2023 and sell it today you would earn a total of  1,373  from holding Axos Financial or generate 34.06% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthInsignificant
Accuracy78.54%
ValuesDaily Returns

Axos Financial  vs.  Farmers And Merchants

 Performance 
       Timeline  
Axos Financial 

Risk-Adjusted Performance

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Very Weak
Over the last 90 days Axos Financial has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Axos Financial is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.
Farmers And Merchants 

Risk-Adjusted Performance

0 of 100

 
Low
 
High
Very Weak
Over the last 90 days Farmers And Merchants has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable technical and fundamental indicators, Farmers is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Axos Financial and Farmers Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Axos Financial and Farmers

The main advantage of trading using opposite Axos Financial and Farmers positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Axos Financial position performs unexpectedly, Farmers 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 Farmers will offset losses from the drop in Farmers' long position.
The idea behind Axos Financial and Farmers And Merchants 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.

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