Correlation Between Century Financial and FNB

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

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

Diversification Opportunities for Century Financial and FNB

-0.05

Correlation Coefficient

Century Financial  FNB

Good diversification

The 3 months correlation between Century and FNB is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding Century Financial Corp and FNB Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FNB Inc and Century Financial 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 Century Financial Corp 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 Century Financial i.e., Century Financial and FNB go up and down completely randomly.

Pair Corralation between Century Financial and FNB

Given the investment horizon of 90 days Century Financial is expected to generate 1.48 times less return on investment than FNB. But when comparing it to its historical volatility, Century Financial Corp is 3.19 times less risky than FNB. It trades about 0.12 of its potential returns per unit of risk. FNB Inc is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  1,933  in FNB Inc on November 20, 2024 and sell it today you would earn a total of  301.00  from holding FNB Inc or generate 15.57% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	39.51%
Values	Daily Returns

Century Financial Corp  vs.  FNB Inc

Century Financial Corp

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Century Financial Corp are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite quite weak technical and fundamental indicators, Century Financial disclosed solid returns over the last few months and may actually be approaching a breakup point.

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 latest weak performance, the Stock's fundamental indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with Century Financial and FNB

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