Correlation Between Fulton Financial and CNB Financial

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

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

Diversification Opportunities for Fulton Financial and CNB Financial

0.57

Correlation Coefficient

Fulton Financial  CNB Financial

Very weak diversification

The 3 months correlation between Fulton and CNB is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Fulton Financial and CNB Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CNB Financial and Fulton Financial 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 Fulton Financial are associated (or correlated) with CNB Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CNB Financial has no effect on the direction of Fulton Financial i.e., Fulton Financial and CNB Financial go up and down completely randomly.

Pair Corralation between Fulton Financial and CNB Financial

Assuming the 90 days horizon Fulton Financial is expected to generate 0.93 times more return on investment than CNB Financial. However, Fulton Financial is 1.07 times less risky than CNB Financial. It trades about 0.16 of its potential returns per unit of risk. CNB Financial is currently generating about 0.1 per unit of risk. If you would invest  1,837  in Fulton Financial on September 12, 2024 and sell it today you would earn a total of  208.00  from holding Fulton Financial or generate 11.32% return on investment over 90 days.

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

Fulton Financial  vs.  CNB Financial

Fulton Financial

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Fulton Financial are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Even with relatively inconsistent basic indicators, Fulton Financial may actually be approaching a critical reversion point that can send shares even higher in January 2025.

CNB Financial

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in CNB Financial are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Even with relatively inconsistent technical and fundamental indicators, CNB Financial may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Fulton Financial and CNB Financial

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

The idea behind Fulton Financial and CNB 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.

Check out your portfolio center.

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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.