Correlation Between FNB and Katahdin Bankshares
Can any of the company-specific risk be diversified away by investing in both FNB and Katahdin Bankshares 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 Katahdin Bankshares into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between FNB Inc and Katahdin Bankshares Corp, you can compare the effects of market volatilities on FNB and Katahdin Bankshares 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 Katahdin Bankshares. Check out your portfolio center. Please also check ongoing floating volatility patterns of FNB and Katahdin Bankshares.
Diversification Opportunities for FNB and Katahdin Bankshares
0.54 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between FNB and Katahdin is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding FNB Inc and Katahdin Bankshares Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Katahdin Bankshares Corp 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 Katahdin Bankshares. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Katahdin Bankshares Corp has no effect on the direction of FNB i.e., FNB and Katahdin Bankshares go up and down completely randomly.
Pair Corralation between FNB and Katahdin Bankshares
Given the investment horizon of 90 days FNB Inc is expected to generate 2.96 times more return on investment than Katahdin Bankshares. However, FNB is 2.96 times more volatile than Katahdin Bankshares Corp. It trades about 0.22 of its potential returns per unit of risk. Katahdin Bankshares Corp is currently generating about 0.19 per unit of risk. If you would invest 2,410 in FNB Inc on September 2, 2024 and sell it today you would earn a total of 90.00 from holding FNB Inc or generate 3.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
FNB Inc vs. Katahdin Bankshares Corp
Performance |
| Timeline |
| FNB Inc |
| Katahdin Bankshares Corp |
FNB and Katahdin Bankshares Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with FNB and Katahdin Bankshares
The main advantage of trading using opposite FNB and Katahdin Bankshares positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FNB position performs unexpectedly, Katahdin Bankshares 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 Katahdin Bankshares will offset losses from the drop in Katahdin Bankshares' long position.The idea behind FNB Inc and Katahdin Bankshares Corp 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.| Katahdin Bankshares vs. FNB Inc | Katahdin Bankshares vs. Mifflinburg Bancorp | Katahdin Bankshares vs. Commercial National Financial | Katahdin Bankshares vs. Apollo Bancorp |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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