Correlation Between FNB and Grand River

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

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

Diversification Opportunities for FNB and Grand River

-0.46

Correlation Coefficient

FNB  Grand River

Very good diversification

The 3 months correlation between FNB and Grand is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding FNB Inc and Grand River Commerce in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Grand River Commerce 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 Grand River. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Grand River Commerce has no effect on the direction of FNB i.e., FNB and Grand River go up and down completely randomly.

Pair Corralation between FNB and Grand River

Given the investment horizon of 90 days FNB Inc is expected to under-perform the Grand River. But the pink sheet apears to be less risky and, when comparing its historical volatility, FNB Inc is 1.75 times less risky than Grand River. The pink sheet trades about -0.01 of its potential returns per unit of risk. The Grand River Commerce is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest  269.00  in Grand River Commerce on September 12, 2024 and sell it today you would earn a total of  26.00  from holding Grand River Commerce or generate 9.67% return on investment over 90 days.

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

FNB Inc  vs.  Grand River Commerce

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.

Grand River Commerce

Risk-Adjusted Performance

3 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Grand River Commerce are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly fragile basic indicators, Grand River may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with FNB and Grand River

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

The idea behind FNB Inc and Grand River Commerce 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.