Correlation Between United Overseas and FNB
Can any of the company-specific risk be diversified away by investing in both United Overseas 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 United Overseas and FNB into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between United Overseas Bank and FNB Inc, you can compare the effects of market volatilities on United Overseas 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 United Overseas with a short position of FNB. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Overseas and FNB.
Diversification Opportunities for United Overseas and FNB
0.35 | Correlation Coefficient |
Weak diversification
The 3 months correlation between United and FNB is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding United Overseas Bank and FNB Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FNB Inc and United Overseas 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 United Overseas Bank 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 United Overseas i.e., United Overseas and FNB go up and down completely randomly.
Pair Corralation between United Overseas and FNB
Assuming the 90 days horizon United Overseas is expected to generate 1.69 times less return on investment than FNB. But when comparing it to its historical volatility, United Overseas Bank is 2.18 times less risky than FNB. It trades about 0.14 of its potential returns per unit of risk. FNB Inc is currently generating about 0.11 of returns per unit of risk over similar time horizon. 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 |
United Overseas Bank vs. FNB Inc
Performance |
| Timeline |
| United Overseas Bank |
| FNB Inc |
United Overseas and FNB Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with United Overseas and FNB
The main advantage of trading using opposite United Overseas and FNB positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Overseas 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.| United Overseas vs. KBC Groep NV | United Overseas vs. DBS Group Holdings | United Overseas vs. HomeStreet | United Overseas vs. Bank of Hawaii |
| FNB vs. Standard Bank Group | FNB vs. PSB Holdings | FNB vs. United Overseas Bank | FNB 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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