Correlation Between Enterprise Bancorp and Axos Financial
Can any of the company-specific risk be diversified away by investing in both Enterprise Bancorp 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 Enterprise Bancorp and Axos Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Enterprise Bancorp and Axos Financial, you can compare the effects of market volatilities on Enterprise Bancorp 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 Enterprise Bancorp with a short position of Axos Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Enterprise Bancorp and Axos Financial.
Diversification Opportunities for Enterprise Bancorp and Axos Financial
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Enterprise and Axos is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Enterprise Bancorp and Axos Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Axos Financial and Enterprise Bancorp 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 Enterprise Bancorp 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 Enterprise Bancorp i.e., Enterprise Bancorp and Axos Financial go up and down completely randomly.
Pair Corralation between Enterprise Bancorp and Axos Financial
Given the investment horizon of 90 days Enterprise Bancorp is expected to under-perform the Axos Financial. In addition to that, Enterprise Bancorp is 1.12 times more volatile than Axos Financial. It trades about -0.11 of its total potential returns per unit of risk. Axos Financial is currently generating about 0.02 per unit of volatility. If you would invest 4,923 in Axos Financial on January 17, 2024 and sell it today you would earn a total of 28.00 from holding Axos Financial or generate 0.57% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Enterprise Bancorp vs. Axos Financial
Performance |
| Timeline |
| Enterprise Bancorp |
| Axos Financial |
Enterprise Bancorp and Axos Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Enterprise Bancorp and Axos Financial
The main advantage of trading using opposite Enterprise Bancorp and Axos Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Enterprise Bancorp 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.The idea behind Enterprise Bancorp and Axos Financial 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.| 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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