Correlation Between Stellar and FNB ETN

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

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

Diversification Opportunities for Stellar and FNB ETN

0.52

Correlation Coefficient

Stellar  FNB ETN

Very weak diversification

The 3 months correlation between Stellar and FNB is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Stellar and FNB ETN on in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FNB ETN on and Stellar 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 Stellar 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 on has no effect on the direction of Stellar i.e., Stellar and FNB ETN go up and down completely randomly.

Pair Corralation between Stellar and FNB ETN

Assuming the 90 days trading horizon Stellar is expected to generate 9.12 times more return on investment than FNB ETN. However, Stellar is 9.12 times more volatile than FNB ETN on. It trades about 0.24 of its potential returns per unit of risk. FNB ETN on is currently generating about 0.17 per unit of risk. If you would invest  9.66  in Stellar on October 27, 2024 and sell it today you would earn a total of  33.34  from holding Stellar or generate 345.13% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	51.56%
Values	Daily Returns

Stellar  vs.  FNB ETN on

Stellar

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Stellar are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady primary indicators, Stellar exhibited solid returns over the last few months and may actually be approaching a breakup point.

FNB ETN on

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in FNB ETN on are ranked lower than 13 (%) 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.

Pair Trading with Stellar and FNB ETN

The main advantage of trading using opposite Stellar and FNB ETN positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Stellar 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 Stellar and FNB ETN on 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.