Correlation Between FNB and Community Bankers

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

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

Diversification Opportunities for FNB and Community Bankers

0.61

Correlation Coefficient

FNB  Community Bankers

Poor diversification

The 3 months correlation between FNB and Community is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding FNB Inc and Community Bankers in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Community Bankers and FNB 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 FNB Inc are associated (or correlated) with Community Bankers. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Community Bankers has no effect on the direction of FNB i.e., FNB and Community Bankers go up and down completely randomly.

Pair Corralation between FNB and Community Bankers

Given the investment horizon of 90 days FNB Inc is expected to generate 0.59 times more return on investment than Community Bankers. However, FNB Inc is 1.69 times less risky than Community Bankers. It trades about 0.1 of its potential returns per unit of risk. Community Bankers is currently generating about -0.07 per unit of risk. If you would invest  2,000  in FNB Inc on September 12, 2024 and sell it today you would earn a total of  400.00  from holding FNB Inc or generate 20.0% return on investment over 90 days.

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

FNB Inc  vs.  Community Bankers

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.

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.

Pair Trading with FNB and Community Bankers

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

The idea behind FNB Inc and Community Bankers 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.