Correlation Between FNB Corp and Capitol Federal

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

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

Diversification Opportunities for FNB Corp and Capitol Federal

0.75

Correlation Coefficient

FNB Corp  Capitol Federal

Poor diversification

The 3 months correlation between FNB and Capitol is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding FNB Corp and Capitol Federal Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Capitol Federal Financial and FNB Corp 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 Corp are associated (or correlated) with Capitol Federal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Capitol Federal Financial has no effect on the direction of FNB Corp i.e., FNB Corp and Capitol Federal go up and down completely randomly.

Pair Corralation between FNB Corp and Capitol Federal

Considering the 90-day investment horizon FNB Corp is expected to under-perform the Capitol Federal. In addition to that, FNB Corp is 1.38 times more volatile than Capitol Federal Financial. It trades about -0.24 of its total potential returns per unit of risk. Capitol Federal Financial is currently generating about 0.12 per unit of volatility. If you would invest  586.00  in Capitol Federal Financial on December 4, 2024 and sell it today you would earn a total of  16.00  from holding Capitol Federal Financial or generate 2.73% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	95.24%
Values	Daily Returns

FNB Corp  vs.  Capitol Federal Financial

FNB Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days FNB Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Capitol Federal Financial

Risk-Adjusted Performance

Very Weak

Over the last 90 days Capitol Federal Financial has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's technical and fundamental indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Pair Trading with FNB Corp and Capitol Federal

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

The idea behind FNB Corp and Capitol Federal Financial 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.