Correlation Between FNB and FS Bancorp

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

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

Diversification Opportunities for FNB and FS Bancorp

-0.6

Correlation Coefficient

FNB  FS Bancorp

Excellent diversification

The 3 months correlation between FNB and FXLG is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding FNB Inc and FS Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FS Bancorp 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 FS Bancorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FS Bancorp has no effect on the direction of FNB i.e., FNB and FS Bancorp go up and down completely randomly.

Pair Corralation between FNB and FS Bancorp

Given the investment horizon of 90 days FNB Inc is expected to under-perform the FS Bancorp. In addition to that, FNB is 1.57 times more volatile than FS Bancorp. It trades about -0.12 of its total potential returns per unit of risk. FS Bancorp is currently generating about 0.23 per unit of volatility. If you would invest  3,180  in FS Bancorp on December 26, 2024 and sell it today you would earn a total of  245.00  from holding FS Bancorp or generate 7.7% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	90.0%
Values	Daily Returns

FNB Inc  vs.  FS Bancorp

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.

FS Bancorp

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in FS Bancorp are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. Despite nearly unfluctuating essential indicators, FS Bancorp may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with FNB and FS Bancorp

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

The idea behind FNB Inc and FS Bancorp 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.