Correlation Between North Dallas and FNB

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

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

Diversification Opportunities for North Dallas and FNB

-0.16

Correlation Coefficient

North Dallas  FNB

Good diversification

The 3 months correlation between North and FNB is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding North Dallas Bank and FNB Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FNB Inc and North Dallas 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 North Dallas Bank are associated (or correlated) with FNB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FNB Inc has no effect on the direction of North Dallas i.e., North Dallas and FNB go up and down completely randomly.

Pair Corralation between North Dallas and FNB

Given the investment horizon of 90 days North Dallas Bank is expected to generate 1.0 times more return on investment than FNB. However, North Dallas Bank is 1.0 times less risky than FNB. It trades about 0.05 of its potential returns per unit of risk. FNB Inc is currently generating about -0.33 per unit of risk. If you would invest  4,775  in North Dallas Bank on October 21, 2024 and sell it today you would earn a total of  75.00  from holding North Dallas Bank or generate 1.57% return on investment over 90 days.

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

North Dallas Bank  vs.  FNB Inc

North Dallas Bank

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in North Dallas Bank are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unsteady fundamental indicators, North Dallas may actually be approaching a critical reversion point that can send shares even higher in February 2025.

FNB Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days FNB Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's fundamental indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with North Dallas and FNB

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

The idea behind North Dallas Bank and FNB Inc 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.