Correlation Between United Bankshares and FNB Corp

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

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

Diversification Opportunities for United Bankshares and FNB Corp

0.26

Correlation Coefficient

United Bankshares  FNB Corp

Modest diversification

The 3 months correlation between United and FNB is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding United Bankshares and FNB Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FNB Corp and United Bankshares 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 United Bankshares are associated (or correlated) with FNB Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FNB Corp has no effect on the direction of United Bankshares i.e., United Bankshares and FNB Corp go up and down completely randomly.

Pair Corralation between United Bankshares and FNB Corp

Given the investment horizon of 90 days United Bankshares is expected to under-perform the FNB Corp. In addition to that, United Bankshares is 1.1 times more volatile than FNB Corp. It trades about -0.19 of its total potential returns per unit of risk. FNB Corp is currently generating about -0.14 per unit of volatility. If you would invest  1,518  in FNB Corp on December 5, 2024 and sell it today you would lose (68.00) from holding FNB Corp or give up 4.48% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

United Bankshares  vs.  FNB Corp

United Bankshares

Risk-Adjusted Performance

Very Weak

Over the last 90 days United Bankshares has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unfluctuating performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in April 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

FNB Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days FNB Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with United Bankshares and FNB Corp

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

The idea behind United Bankshares and FNB Corp 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.