Correlation Between Fifth Third and Axos Financial

By analyzing existing cross correlation between Fifth Third Bancorp and Axos Financial, you can compare the effects of market volatilities on Fifth Third 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 Fifth Third with a short position of Axos Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fifth Third and Axos Financial.

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Can any of the company-specific risk be diversified away by investing in both Fifth Third 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 Fifth Third and Axos Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.

Diversification Opportunities for Fifth Third and Axos Financial

0.94
  Correlation Coefficient
Fifth Third Bancorp
Axos Financial

Almost no diversification

The 12 months correlation between Fifth and Axos Financial is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Fifth Third Bancorp and Axos Financial in the same portfolio assuming nothing else is changed. The correlation between historical prices or returns on Axos Financial and Fifth Third 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 Fifth Third 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 Fifth Third i.e., Fifth Third and Axos Financial go up and down completely randomly.

Pair Corralation between Fifth Third and Axos Financial

Given the investment horizon of 90 days Fifth Third Bancorp is expected to generate 0.75 times more return on investment than Axos Financial. However, Fifth Third Bancorp is 1.33 times less risky than Axos Financial. It trades about 0.2 of its potential returns per unit of risk. Axos Financial is currently generating about -0.03 per unit of risk. If you would invest  3,596  in Fifth Third Bancorp on June 20, 2021 and sell it today you would earn a total of  416.00  from holding Fifth Third Bancorp or generate 11.57% return on investment over 90 days.
Time Period12 Months [change]
DirectionMoves Together 
StrengthVery Strong
Accuracy97.73%
ValuesDaily Returns

Fifth Third Bancorp  vs.  Axos Financial

 Performance (%) 
      Timeline 
Fifth Third Bancorp 
 Fifth Performance
10 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Fifth Third Bancorp are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Fifth Third sustained solid returns over the last few months and may actually be approaching a breakup point.

Fifth Price Channel

Axos Financial 
 Axos Financial Performance
10 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Axos Financial are ranked lower than 10 (%) 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.

Axos Financial Price Channel

Fifth Third and Axos Financial Volatility Contrast

 Predicted Return Density 
      Returns 

Pair Trading with Fifth Third and Axos Financial

The main advantage of trading using opposite Fifth Third and Axos Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fifth Third 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.

Fifth Third Bancorp

Pair trading matchups for Fifth Third

The idea behind Fifth Third 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

Pair trading matchups for Axos Financial

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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.

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