Correlation Between Community Bankers and FNB

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

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

Diversification Opportunities for Community Bankers and FNB

0.61

Correlation Coefficient

Community Bankers  FNB

Poor diversification

The 3 months correlation between Community and FNB is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Community Bankers and FNB Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FNB Inc and Community Bankers 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 Community Bankers 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 Community Bankers i.e., Community Bankers and FNB go up and down completely randomly.

Pair Corralation between Community Bankers and FNB

Given the investment horizon of 90 days Community Bankers is expected to generate 0.59 times more return on investment than FNB. However, Community Bankers is 1.68 times less risky than FNB. It trades about 0.28 of its potential returns per unit of risk. FNB Inc is currently generating about 0.04 per unit of risk. If you would invest  412.00  in Community Bankers on September 12, 2024 and sell it today you would earn a total of  88.00  from holding Community Bankers or generate 21.36% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Community Bankers  vs.  FNB Inc

Community Bankers

Risk-Adjusted Performance

21 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Community Bankers are ranked lower than 21 (%) of all global equities and portfolios over the last 90 days. Even with relatively fragile basic indicators, Community Bankers reported solid returns over the last few months and may actually be approaching a breakup point.

FNB Inc

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in FNB Inc are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. 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 Community Bankers and FNB

The main advantage of trading using opposite Community Bankers and FNB positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Community Bankers 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 Community Bankers 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.