Correlation Between FNB Corp and ST Bancorp

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

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

Diversification Opportunities for FNB Corp and ST Bancorp

0.95

Correlation Coefficient

FNB Corp  ST Bancorp

Almost no diversification

The 3 months correlation between FNB and STBA is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding FNB Corp and ST Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ST Bancorp and FNB Corp 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 Corp are associated (or correlated) with ST Bancorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ST Bancorp has no effect on the direction of FNB Corp i.e., FNB Corp and ST Bancorp go up and down completely randomly.

Pair Corralation between FNB Corp and ST Bancorp

Considering the 90-day investment horizon FNB Corp is expected to under-perform the ST Bancorp. In addition to that, FNB Corp is 1.28 times more volatile than ST Bancorp. It trades about -0.05 of its total potential returns per unit of risk. ST Bancorp is currently generating about -0.02 per unit of volatility. If you would invest  3,876  in ST Bancorp on February 3, 2025 and sell it today you would lose (135.00) from holding ST Bancorp or give up 3.48% of portfolio value over 90 days.

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

FNB Corp  vs.  ST Bancorp

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.

ST Bancorp

Risk-Adjusted Performance

Very Weak

Over the last 90 days ST Bancorp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong fundamental drivers, ST Bancorp is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with FNB Corp and ST Bancorp

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

The idea behind FNB Corp and ST Bancorp 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.

Check out your portfolio center.

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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.