Correlation Between FNB and Standard Bank
Can any of the company-specific risk be diversified away by investing in both FNB and Standard Bank 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 Standard Bank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between FNB Inc and Standard Bank Group, you can compare the effects of market volatilities on FNB and Standard Bank 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 Standard Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of FNB and Standard Bank.
Diversification Opportunities for FNB and Standard Bank
0.23 | Correlation Coefficient |
Modest diversification
The 3 months correlation between FNB and Standard is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding FNB Inc and Standard Bank Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Standard Bank Group 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 Standard Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Standard Bank Group has no effect on the direction of FNB i.e., FNB and Standard Bank go up and down completely randomly.
Pair Corralation between FNB and Standard Bank
Given the investment horizon of 90 days FNB Inc is expected to generate 1.1 times more return on investment than Standard Bank. However, FNB is 1.1 times more volatile than Standard Bank Group. It trades about 0.11 of its potential returns per unit of risk. Standard Bank Group is currently generating about 0.09 per unit of risk. If you would invest 1,729 in FNB Inc on August 26, 2024 and sell it today you would earn a total of 771.00 from holding FNB Inc or generate 44.59% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 62.22% |
| Values | Daily Returns |
FNB Inc vs. Standard Bank Group
Performance |
| Timeline |
| FNB Inc |
| Standard Bank Group |
FNB and Standard Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with FNB and Standard Bank
The main advantage of trading using opposite FNB and Standard Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FNB position performs unexpectedly, Standard Bank 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 Standard Bank will offset losses from the drop in Standard Bank's long position.| FNB vs. Standard Bank Group | FNB vs. PSB Holdings | FNB vs. United Overseas Bank | FNB vs. Turkiye Garanti Bankasi |
| Standard Bank vs. PSB Holdings | Standard Bank vs. United Overseas Bank | Standard Bank vs. Turkiye Garanti Bankasi |
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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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