Correlation Between Dime Community and Axos Financial
Can any of the company-specific risk be diversified away by investing in both Dime Community and Axos Financial 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 Dime Community and Axos Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dime Community Bancshares and Axos Financial, you can compare the effects of market volatilities on Dime Community and Axos Financial 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 Dime Community with a short position of Axos Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dime Community and Axos Financial.
Diversification Opportunities for Dime Community and Axos Financial
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Dime and Axos is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Dime Community Bancshares and Axos Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Axos Financial and Dime Community 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 Dime Community Bancshares are associated (or correlated) with Axos Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Axos Financial has no effect on the direction of Dime Community i.e., Dime Community and Axos Financial go up and down completely randomly.
Pair Corralation between Dime Community and Axos Financial
Given the investment horizon of 90 days Dime Community Bancshares is expected to generate 1.68 times more return on investment than Axos Financial. However, Dime Community is 1.68 times more volatile than Axos Financial. It trades about 0.09 of its potential returns per unit of risk. Axos Financial is currently generating about -0.04 per unit of risk. If you would invest 1,832 in Dime Community Bancshares on January 24, 2024 and sell it today you would earn a total of 75.00 from holding Dime Community Bancshares or generate 4.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dime Community Bancshares vs. Axos Financial
Performance |
| Timeline |
| Dime Community Bancshares |
| Axos Financial |
Dime Community and Axos Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dime Community and Axos Financial
The main advantage of trading using opposite Dime Community and Axos Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dime Community position performs unexpectedly, Axos Financial 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 Axos Financial will offset losses from the drop in Axos Financial's long position.| Dime Community vs. Cullman Bancorp | Dime Community vs. Home Federal Bancorp | Dime Community vs. First Financial Northwest | Dime Community vs. First Northwest Bancorp |
| Axos Financial vs. Cullman Bancorp | Axos Financial vs. Home Federal Bancorp | Axos Financial vs. First Financial Northwest | Axos Financial vs. First Northwest 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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