Correlation Between Madison County and Axos Financial

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

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

Diversification Opportunities for Madison County and Axos Financial

0.19

Correlation Coefficient

Madison County  Axos Financial

Average diversification

The 3 months correlation between Madison and Axos is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding Madison County Financial and Axos Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Axos Financial and Madison County 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 Madison County Financial 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 Madison County i.e., Madison County and Axos Financial go up and down completely randomly.

Pair Corralation between Madison County and Axos Financial

If you would invest  4,923  in Axos Financial on January 16, 2024 and sell it today you would earn a total of  17.00  from holding Axos Financial or generate 0.35% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	5.0%
Values	Daily Returns

Madison County Financial  vs.  Axos Financial

Madison County Financial

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Madison County Financial has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent fundamental drivers, Madison County is not utilizing all of its potentials. The recent stock price mess, may contribute to short-term losses for the institutional investors.

Axos Financial

Risk-Adjusted Performance

0 of 100

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 latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Madison County and Axos Financial

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

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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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.