Correlation Between FNB ETN and Advtech

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

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

Diversification Opportunities for FNB ETN and Advtech

0.71

Correlation Coefficient

FNB ETN  Advtech

Poor diversification

The 3 months correlation between FNB and Advtech is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding FNB ETN JPMORGQ and Advtech in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Advtech and FNB ETN 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 ETN JPMORGQ are associated (or correlated) with Advtech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Advtech has no effect on the direction of FNB ETN i.e., FNB ETN and Advtech go up and down completely randomly.

Pair Corralation between FNB ETN and Advtech

Assuming the 90 days trading horizon FNB ETN JPMORGQ is expected to under-perform the Advtech. In addition to that, FNB ETN is 1.01 times more volatile than Advtech. It trades about -0.09 of its total potential returns per unit of risk. Advtech is currently generating about 0.04 per unit of volatility. If you would invest  328,400  in Advtech on October 5, 2024 and sell it today you would earn a total of  2,600  from holding Advtech or generate 0.79% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	57.89%
Values	Daily Returns

FNB ETN JPMORGQ  vs.  Advtech

FNB ETN JPMORGQ

Risk-Adjusted Performance

0 of 100

Solid

Over the last 90 days FNB ETN JPMORGQ has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat weak basic indicators, FNB ETN sustained solid returns over the last few months and may actually be approaching a breakup point.

Advtech

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Advtech are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady technical and fundamental indicators, Advtech may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with FNB ETN and Advtech

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

The idea behind FNB ETN JPMORGQ and Advtech 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.