Correlation Between First Capital and Axos Financial

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

Diversification Opportunities for First Capital and Axos Financial

0.66
  Correlation Coefficient

Poor diversification

The 3 months correlation between First and Axos is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding First Capital and Axos Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Axos Financial and First Capital 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 First Capital 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 First Capital i.e., First Capital and Axos Financial go up and down completely randomly.

Pair Corralation between First Capital and Axos Financial

Given the investment horizon of 90 days First Capital is expected to generate 1.33 times more return on investment than Axos Financial. However, First Capital is 1.33 times more volatile than Axos Financial. It trades about -0.04 of its potential returns per unit of risk. Axos Financial is currently generating about -0.06 per unit of risk. If you would invest  4,813  in First Capital on March 14, 2025 and sell it today you would lose (97.00) from holding First Capital or give up 2.02% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

First Capital  vs.  Axos Financial

 Performance 
       Timeline  
First Capital 

Risk-Adjusted Performance

OK

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in First Capital are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Even with relatively fragile basic indicators, First Capital reported solid returns over the last few months and may actually be approaching a breakup point.
Axos Financial 

Risk-Adjusted Performance

OK

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in Axos Financial are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unsteady basic indicators, Axos Financial showed solid returns over the last few months and may actually be approaching a breakup point.

First Capital and Axos Financial Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with First Capital and Axos Financial

The main advantage of trading using opposite First Capital and Axos Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Capital 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 First Capital 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.
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.

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