Correlation Between RCL Foods and FNB ETN

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

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

Diversification Opportunities for RCL Foods and FNB ETN

0.7

Correlation Coefficient

RCL Foods  FNB ETN

Poor diversification

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

Pair Corralation between RCL Foods and FNB ETN

Assuming the 90 days trading horizon RCL Foods is expected to generate 1.11 times more return on investment than FNB ETN. However, RCL Foods is 1.11 times more volatile than FNB ETN JPMORGQ. It trades about 0.01 of its potential returns per unit of risk. FNB ETN JPMORGQ is currently generating about 0.0 per unit of risk. If you would invest  95,900  in RCL Foods on December 22, 2024 and sell it today you would earn a total of  100.00  from holding RCL Foods or generate 0.1% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	59.68%
Values	Daily Returns

RCL Foods  vs.  FNB ETN JPMORGQ

RCL Foods

Risk-Adjusted Performance

Very Weak

Over the last 90 days RCL Foods has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, RCL Foods is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

FNB ETN JPMORGQ

Risk-Adjusted Performance

Very Weak

Over the last 90 days FNB ETN JPMORGQ has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, FNB ETN is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with RCL Foods and FNB ETN

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

The idea behind RCL Foods and FNB ETN JPMORGQ 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.