Correlation Between Northfield Bancorp and FNB
Can any of the company-specific risk be diversified away by investing in both Northfield Bancorp and FNB 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 Northfield Bancorp and FNB into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Northfield Bancorp and FNB Inc, you can compare the effects of market volatilities on Northfield Bancorp and FNB 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 Northfield Bancorp with a short position of FNB. Check out your portfolio center. Please also check ongoing floating volatility patterns of Northfield Bancorp and FNB.
Diversification Opportunities for Northfield Bancorp and FNB
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Northfield and FNB is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Northfield Bancorp and FNB Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FNB Inc and Northfield Bancorp 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 Northfield Bancorp are associated (or correlated) with FNB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FNB Inc has no effect on the direction of Northfield Bancorp i.e., Northfield Bancorp and FNB go up and down completely randomly.
Pair Corralation between Northfield Bancorp and FNB
Given the investment horizon of 90 days Northfield Bancorp is expected to generate 1.65 times more return on investment than FNB. However, Northfield Bancorp is 1.65 times more volatile than FNB Inc. It trades about 0.19 of its potential returns per unit of risk. FNB Inc is currently generating about 0.05 per unit of risk. If you would invest 1,125 in Northfield Bancorp on November 8, 2024 and sell it today you would earn a total of 82.00 from holding Northfield Bancorp or generate 7.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 90.0% |
| Values | Daily Returns |
Northfield Bancorp vs. FNB Inc
Performance |
| Timeline |
| Northfield Bancorp |
| FNB Inc |
Northfield Bancorp and FNB Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Northfield Bancorp and FNB
The main advantage of trading using opposite Northfield Bancorp and FNB positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Northfield Bancorp position performs unexpectedly, FNB 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 FNB will offset losses from the drop in FNB's long position.| Northfield Bancorp vs. Finward Bancorp | Northfield Bancorp vs. Community West Bancshares | Northfield Bancorp vs. First Financial Northwest | Northfield Bancorp vs. Home Bancorp |
| FNB vs. Century Financial Corp | FNB vs. Apollo Bancorp | FNB vs. Commercial National Financial | FNB vs. Eastern Michigan Financial |
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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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