Correlation Between Spring Valley and FNB

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

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

Diversification Opportunities for Spring Valley and FNB

0.13

Correlation Coefficient

Spring Valley  FNB

Average diversification

The 3 months correlation between Spring and FNB is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding Spring Valley Acquisition and FNB Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FNB Inc and Spring Valley 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 Spring Valley Acquisition 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 Spring Valley i.e., Spring Valley and FNB go up and down completely randomly.

Pair Corralation between Spring Valley and FNB

Given the investment horizon of 90 days Spring Valley is expected to generate 33.84 times less return on investment than FNB. But when comparing it to its historical volatility, Spring Valley Acquisition is 3.97 times less risky than FNB. It trades about 0.01 of its potential returns per unit of risk. FNB Inc is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  2,300  in FNB Inc on September 13, 2024 and sell it today you would earn a total of  100.00  from holding FNB Inc or generate 4.35% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.44%
Values	Daily Returns

Spring Valley Acquisition  vs.  FNB Inc

Spring Valley Acquisition

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Spring Valley Acquisition has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong forward indicators, Spring Valley is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

FNB Inc

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in FNB Inc are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable fundamental indicators, FNB is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Spring Valley and FNB

The main advantage of trading using opposite Spring Valley and FNB positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Spring Valley 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 Spring Valley Acquisition 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 Commodity Directory module to find actively traded commodities issued by global exchanges.