Correlation Between FNB ETN and HomeChoice Investments

Can any of the company-specific risk be diversified away by investing in both FNB ETN and HomeChoice Investments 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 HomeChoice Investments 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 HomeChoice Investments, you can compare the effects of market volatilities on FNB ETN and HomeChoice Investments 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 HomeChoice Investments. Check out your portfolio center. Please also check ongoing floating volatility patterns of FNB ETN and HomeChoice Investments.

Diversification Opportunities for FNB ETN and HomeChoice Investments

-0.62

Correlation Coefficient

FNB ETN  HomeChoice Investments

Excellent diversification

The 3 months correlation between FNB and HomeChoice is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding FNB ETN JPMORGQ and HomeChoice Investments in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HomeChoice Investments 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 HomeChoice Investments. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HomeChoice Investments has no effect on the direction of FNB ETN i.e., FNB ETN and HomeChoice Investments go up and down completely randomly.

Pair Corralation between FNB ETN and HomeChoice Investments

Assuming the 90 days trading horizon FNB ETN JPMORGQ is expected to generate 0.81 times more return on investment than HomeChoice Investments. However, FNB ETN JPMORGQ is 1.24 times less risky than HomeChoice Investments. It trades about 0.04 of its potential returns per unit of risk. HomeChoice Investments is currently generating about 0.01 per unit of risk. If you would invest  256,200  in FNB ETN JPMORGQ on December 25, 2024 and sell it today you would earn a total of  7,300  from holding FNB ETN JPMORGQ or generate 2.85% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	60.66%
Values	Daily Returns

FNB ETN JPMORGQ  vs.  HomeChoice Investments

FNB ETN JPMORGQ

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in FNB ETN JPMORGQ are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, FNB ETN may actually be approaching a critical reversion point that can send shares even higher in April 2025.

HomeChoice Investments

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in HomeChoice Investments are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound technical and fundamental indicators, HomeChoice Investments is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with FNB ETN and HomeChoice Investments

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

The idea behind FNB ETN JPMORGQ and HomeChoice Investments 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 Search module to search for actively traded equities including funds and ETFs from over 30 global markets.