Correlation Between FNB Corp and Banco Latinoamericano

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Can any of the company-specific risk be diversified away by investing in both FNB Corp and Banco Latinoamericano 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 Corp and Banco Latinoamericano into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between FNB Corp and Banco Latinoamericano DE, you can compare the effects of market volatilities on FNB Corp and Banco Latinoamericano 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 Corp with a short position of Banco Latinoamericano. Check out your portfolio center. Please also check ongoing floating volatility patterns of FNB Corp and Banco Latinoamericano.

Diversification Opportunities for FNB Corp and Banco Latinoamericano

0.93
  Correlation Coefficient

Almost no diversification

The 3 months correlation between FNB Corp and Banco is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding FNB Corp and Banco Latinoamericano DE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Banco Latinoamericano and FNB Corp 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 Corp are associated (or correlated) with Banco Latinoamericano. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Banco Latinoamericano has no effect on the direction of FNB Corp i.e., FNB Corp and Banco Latinoamericano go up and down completely randomly.

Pair Corralation between FNB Corp and Banco Latinoamericano

Considering the 90-day investment horizon FNB Corp is expected to under-perform the Banco Latinoamericano. But the stock apears to be less risky and, when comparing its historical volatility, FNB Corp is 1.21 times less risky than Banco Latinoamericano. The stock trades about -0.1 of its potential returns per unit of risk. The Banco Latinoamericano DE is currently generating about -0.04 of returns per unit of risk over similar time horizon. If you would invest  1,400  in Banco Latinoamericano DE on March 26, 2022 and sell it today you would lose (39.00)  from holding Banco Latinoamericano DE or give up 2.79% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Strong
Accuracy100.0%
ValuesDaily Returns

FNB Corp  vs.  Banco Latinoamericano DE

 Performance (%) 
      Timeline 
FNB Corp 
FNB Corp Performance
0 of 100
Over the last 90 days FNB Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Structure and Payout Changes

Forward Annual Dividend Yield
0.0439
Payout Ratio
0.4
Last Split Factor
105:100
Forward Annual Dividend Rate
0.48
Dividend Date
2022-06-15
Ex Dividend Date
2022-06-02
Last Split Date
2003-05-13

FNB Corp Price Channel

Banco Latinoamericano 
Banco Performance
0 of 100
Over the last 90 days Banco Latinoamericano DE has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's essential indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Structure and Payout Changes

Forward Annual Dividend Yield
0.0762
Payout Ratio
0.6
Forward Annual Dividend Rate
1.0
Dividend Date
2022-06-01
Ex Dividend Date
2022-05-13

Banco Price Channel

FNB Corp and Banco Latinoamericano Volatility Contrast

 Predicted Return Density 
      Returns 

Pair Trading with FNB Corp and Banco Latinoamericano

The main advantage of trading using opposite FNB Corp and Banco Latinoamericano positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FNB Corp position performs unexpectedly, Banco Latinoamericano 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 Banco Latinoamericano will offset losses from the drop in Banco Latinoamericano's long position.

FNB Corp

Pair trading matchups for FNB Corp

The idea behind FNB Corp and Banco Latinoamericano DE 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.

Banco Latinoamericano DE

Pair trading matchups for Banco Latinoamericano

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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.

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