Correlation Between Bank of Utica and FNB

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

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

Diversification Opportunities for Bank of Utica and FNB

0.54

Correlation Coefficient

Bank of Utica  FNB

Very weak diversification

The 3 months correlation between Bank and FNB is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Bank of Utica and FNB Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FNB Inc and Bank of Utica 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 Bank of Utica 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 Bank of Utica i.e., Bank of Utica and FNB go up and down completely randomly.

Pair Corralation between Bank of Utica and FNB

Given the investment horizon of 90 days Bank of Utica is expected to generate 0.47 times more return on investment than FNB. However, Bank of Utica is 2.11 times less risky than FNB. It trades about 0.3 of its potential returns per unit of risk. FNB Inc is currently generating about 0.08 per unit of risk. If you would invest  41,500  in Bank of Utica on August 30, 2024 and sell it today you would earn a total of  7,300  from holding Bank of Utica or generate 17.59% return on investment over 90 days.

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

Bank of Utica  vs.  FNB Inc

Bank of Utica

Risk-Adjusted Performance

23 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Bank of Utica are ranked lower than 23 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Bank of Utica unveiled solid returns over the last few months and may actually be approaching a breakup point.

FNB Inc

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in FNB Inc are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak fundamental indicators, FNB may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Pair Trading with Bank of Utica and FNB

The main advantage of trading using opposite Bank of Utica and FNB positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of Utica 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 Bank of Utica 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.