Correlation Between MidCap Financial and PNC Financial
Can any of the company-specific risk be diversified away by investing in both MidCap Financial and PNC Financial 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 MidCap Financial and PNC Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between MidCap Financial Investment and PNC Financial Services, you can compare the effects of market volatilities on MidCap Financial and PNC Financial 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 MidCap Financial with a short position of PNC Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of MidCap Financial and PNC Financial.
Diversification Opportunities for MidCap Financial and PNC Financial
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between MidCap and PNC is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding MidCap Financial Investment and PNC Financial Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PNC Financial Services and MidCap Financial 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 MidCap Financial Investment are associated (or correlated) with PNC Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PNC Financial Services has no effect on the direction of MidCap Financial i.e., MidCap Financial and PNC Financial go up and down completely randomly.
Pair Corralation between MidCap Financial and PNC Financial
Assuming the 90 days trading horizon MidCap Financial is expected to generate 2.29 times less return on investment than PNC Financial. But when comparing it to its historical volatility, MidCap Financial Investment is 1.55 times less risky than PNC Financial. It trades about 0.05 of its potential returns per unit of risk. PNC Financial Services is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 18,443 in PNC Financial Services on October 25, 2024 and sell it today you would earn a total of 357.00 from holding PNC Financial Services or generate 1.94% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
MidCap Financial Investment vs. PNC Financial Services
Performance |
| Timeline |
| MidCap Financial Inv |
| PNC Financial Services |
MidCap Financial and PNC Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MidCap Financial and PNC Financial
The main advantage of trading using opposite MidCap Financial and PNC Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MidCap Financial position performs unexpectedly, PNC Financial 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 PNC Financial will offset losses from the drop in PNC Financial's long position.| MidCap Financial vs. ANTA SPORTS PRODUCT | MidCap Financial vs. COLUMBIA SPORTSWEAR | MidCap Financial vs. ON SEMICONDUCTOR | MidCap Financial vs. PLAY2CHILL SA ZY |
| PNC Financial vs. Penn National Gaming | PNC Financial vs. Media and Games | PNC Financial vs. CAREER EDUCATION | PNC Financial vs. Perdoceo Education |
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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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