Correlation Between FNB ETN and NewWave GBP

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

Diversification Opportunities for FNB ETN and NewWave GBP

0.7

Correlation Coefficient

FNB ETN  NewWave GBP

Poor diversification

The 3 months correlation between FNB and NewWave is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding FNB ETN JPMORGQ and NewWave GBP Currency in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NewWave GBP Currency 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 NewWave GBP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NewWave GBP Currency has no effect on the direction of FNB ETN i.e., FNB ETN and NewWave GBP go up and down completely randomly.

Pair Corralation between FNB ETN and NewWave GBP

Assuming the 90 days trading horizon FNB ETN JPMORGQ is expected to generate 3.09 times more return on investment than NewWave GBP. However, FNB ETN is 3.09 times more volatile than NewWave GBP Currency. It trades about 0.24 of its potential returns per unit of risk. NewWave GBP Currency is currently generating about 0.07 per unit of risk. If you would invest  235,400  in FNB ETN JPMORGQ on October 22, 2024 and sell it today you would earn a total of  33,500  from holding FNB ETN JPMORGQ or generate 14.23% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	53.33%
Values	Daily Returns

FNB ETN JPMORGQ  vs.  NewWave GBP Currency

FNB ETN JPMORGQ

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in FNB ETN JPMORGQ are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, FNB ETN sustained solid returns over the last few months and may actually be approaching a breakup point.

NewWave GBP Currency

Risk-Adjusted Performance

5 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in NewWave GBP Currency are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong technical and fundamental indicators, NewWave GBP 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 ETN and NewWave GBP

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

The idea behind FNB ETN JPMORGQ and NewWave GBP Currency 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.