Correlation Between FNB and First Reliance

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

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

Diversification Opportunities for FNB and First Reliance

0.1

Correlation Coefficient

FNB  First Reliance

Average diversification

The 3 months correlation between FNB and First is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding FNB Inc and First Reliance Bancshares in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Reliance Bancshares and FNB 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 FNB Inc are associated (or correlated) with First Reliance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Reliance Bancshares has no effect on the direction of FNB i.e., FNB and First Reliance go up and down completely randomly.

Pair Corralation between FNB and First Reliance

Given the investment horizon of 90 days FNB Inc is expected to under-perform the First Reliance. But the pink sheet apears to be less risky and, when comparing its historical volatility, FNB Inc is 2.23 times less risky than First Reliance. The pink sheet trades about -0.08 of its potential returns per unit of risk. The First Reliance Bancshares is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  945.00  in First Reliance Bancshares on May 21, 2025 and sell it today you would earn a total of  20.00  from holding First Reliance Bancshares or generate 2.12% return on investment over 90 days.

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

FNB Inc  vs.  First Reliance Bancshares

FNB Inc

Risk-Adjusted Performance

Weakest

Over the last 90 days FNB Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable fundamental indicators, FNB is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

First Reliance Bancshares

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in First Reliance Bancshares are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent basic indicators, First Reliance is not utilizing all of its potentials. The current stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with FNB and First Reliance

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

The idea behind FNB Inc and First Reliance Bancshares 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.