Correlation Between FB Financial and PJT Partners

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

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

Diversification Opportunities for FB Financial and PJT Partners

0.91

Correlation Coefficient

FB Financial  PJT Partners

Almost no diversification

The 3 months correlation between FBK and PJT is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding FB Financial Corp and PJT Partners in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PJT Partners and FB 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 FB Financial Corp are associated (or correlated) with PJT Partners. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PJT Partners has no effect on the direction of FB Financial i.e., FB Financial and PJT Partners go up and down completely randomly.

Pair Corralation between FB Financial and PJT Partners

Considering the 90-day investment horizon FB Financial Corp is expected to under-perform the PJT Partners. But the stock apears to be less risky and, when comparing its historical volatility, FB Financial Corp is 1.18 times less risky than PJT Partners. The stock trades about -0.29 of its potential returns per unit of risk. The PJT Partners is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  15,845  in PJT Partners on October 11, 2024 and sell it today you would lose (8.00) from holding PJT Partners or give up 0.05% of portfolio value over 90 days.

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

FB Financial Corp  vs.  PJT Partners

FB Financial Corp

Risk-Adjusted Performance

3 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in FB Financial Corp are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite quite weak fundamental drivers, FB Financial may actually be approaching a critical reversion point that can send shares even higher in February 2025.

PJT Partners

Risk-Adjusted Performance

5 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in PJT Partners are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively conflicting forward-looking indicators, PJT Partners may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with FB Financial and PJT Partners

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

The idea behind FB Financial Corp and PJT Partners 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.