Correlation Between FNB Corp and ST Bancorp

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

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

Diversification Opportunities for FNB Corp and ST Bancorp

0.65

Correlation Coefficient

FNB Corp  ST Bancorp

Poor diversification

The 3 months correlation between FNB and STBA is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding FNB Corp and ST Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ST Bancorp 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 ST Bancorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ST Bancorp has no effect on the direction of FNB Corp i.e., FNB Corp and ST Bancorp go up and down completely randomly.

Pair Corralation between FNB Corp and ST Bancorp

Considering the 90-day investment horizon FNB Corp is expected to generate 1.03 times more return on investment than ST Bancorp. However, FNB Corp is 1.03 times more volatile than ST Bancorp. It trades about 0.11 of its potential returns per unit of risk. ST Bancorp is currently generating about 0.05 per unit of risk. If you would invest  1,420  in FNB Corp on September 13, 2024 and sell it today you would earn a total of  176.00  from holding FNB Corp or generate 12.39% return on investment over 90 days.

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

FNB Corp  vs.  ST Bancorp

FNB Corp

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in FNB Corp are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, FNB Corp sustained solid returns over the last few months and may actually be approaching a breakup point.

ST Bancorp

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in ST Bancorp are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong fundamental drivers, ST Bancorp is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with FNB Corp and ST Bancorp

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

The idea behind FNB Corp and ST 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 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.