Correlation Between Commercial National and FNB

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

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

Diversification Opportunities for Commercial National and FNB

-0.37

Correlation Coefficient

Commercial National  FNB

Very good diversification

The 3 months correlation between Commercial and FNB is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Commercial National Financial and FNB Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FNB Inc and Commercial National 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 Commercial National Financial are associated (or correlated) with FNB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FNB Inc has no effect on the direction of Commercial National i.e., Commercial National and FNB go up and down completely randomly.

Pair Corralation between Commercial National and FNB

Given the investment horizon of 90 days Commercial National Financial is expected to generate 2.08 times more return on investment than FNB. However, Commercial National is 2.08 times more volatile than FNB Inc. It trades about 0.03 of its potential returns per unit of risk. FNB Inc is currently generating about -0.11 per unit of risk. If you would invest  1,020  in Commercial National Financial on December 30, 2024 and sell it today you would earn a total of  20.00  from holding Commercial National Financial or generate 1.96% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	91.94%
Values	Daily Returns

Commercial National Financial  vs.  FNB Inc

Commercial National

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Commercial National Financial are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound technical and fundamental indicators, Commercial National is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

FNB Inc

Risk-Adjusted Performance

Very Weak

Over the last 90 days FNB Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable fundamental indicators, FNB is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Commercial National and FNB

The main advantage of trading using opposite Commercial National and FNB positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Commercial National position performs unexpectedly, FNB 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 FNB will offset losses from the drop in FNB's long position.

The idea behind Commercial National Financial and FNB Inc 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.