Correlation Between FNB and Eastern Michigan
Can any of the company-specific risk be diversified away by investing in both FNB and Eastern Michigan 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 Eastern Michigan into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between FNB Inc and Eastern Michigan Financial, you can compare the effects of market volatilities on FNB and Eastern Michigan 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 Eastern Michigan. Check out your portfolio center. Please also check ongoing floating volatility patterns of FNB and Eastern Michigan.
Diversification Opportunities for FNB and Eastern Michigan
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between FNB and Eastern is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding FNB Inc and Eastern Michigan Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eastern Michigan Fin 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 Eastern Michigan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eastern Michigan Fin has no effect on the direction of FNB i.e., FNB and Eastern Michigan go up and down completely randomly.
Pair Corralation between FNB and Eastern Michigan
Given the investment horizon of 90 days FNB is expected to generate 1.66 times less return on investment than Eastern Michigan. In addition to that, FNB is 1.44 times more volatile than Eastern Michigan Financial. It trades about 0.08 of its total potential returns per unit of risk. Eastern Michigan Financial is currently generating about 0.19 per unit of volatility. If you would invest 3,050 in Eastern Michigan Financial on August 29, 2024 and sell it today you would earn a total of 491.00 from holding Eastern Michigan Financial or generate 16.1% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
FNB Inc vs. Eastern Michigan Financial
Performance |
| Timeline |
| FNB Inc |
| Eastern Michigan Fin |
FNB and Eastern Michigan Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with FNB and Eastern Michigan
The main advantage of trading using opposite FNB and Eastern Michigan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FNB position performs unexpectedly, Eastern Michigan 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 Eastern Michigan will offset losses from the drop in Eastern Michigan's long position.| FNB vs. Century Financial Corp | FNB vs. Apollo Bancorp | FNB vs. Commercial National Financial | FNB vs. Eastern Michigan Financial |
| Eastern Michigan vs. Commercial National Financial | Eastern Michigan vs. Mifflinburg Bancorp | Eastern Michigan vs. Apollo Bancorp | Eastern Michigan vs. Community Bankers |
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 Correlations module to find global opportunities by holding instruments from different markets.
Other Complementary Tools
| Aroon Oscillator Analyze current equity momentum using Aroon Oscillator and other momentum ratios | |
| Equity Valuation Check real value of public entities based on technical and fundamental data | |
| FinTech Suite Use AI to screen and filter profitable investment opportunities | |
| ETFs Find actively traded Exchange Traded Funds (ETF) from around the world | |
| Equity Search Search for actively traded equities including funds and ETFs from over 30 global markets |