Correlation Between First Capital and PNC Financial
Can any of the company-specific risk be diversified away by investing in both First Capital 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 First Capital and PNC Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between First Capital and PNC Financial Services, you can compare the effects of market volatilities on First Capital 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 First Capital with a short position of PNC Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Capital and PNC Financial.
Diversification Opportunities for First Capital and PNC Financial
-0.16 | Correlation Coefficient |
Good diversification
The 3 months correlation between First and PNC is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding First Capital 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 First Capital 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 First Capital 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 First Capital i.e., First Capital and PNC Financial go up and down completely randomly.
Pair Corralation between First Capital and PNC Financial
Given the investment horizon of 90 days First Capital is expected to generate 6.85 times less return on investment than PNC Financial. In addition to that, First Capital is 1.64 times more volatile than PNC Financial Services. It trades about 0.01 of its total potential returns per unit of risk. PNC Financial Services is currently generating about 0.16 per unit of volatility. If you would invest 18,297 in PNC Financial Services on August 31, 2024 and sell it today you would earn a total of 3,203 from holding PNC Financial Services or generate 17.51% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
First Capital vs. PNC Financial Services
Performance |
| Timeline |
| First Capital |
| PNC Financial Services |
First Capital and PNC Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Capital and PNC Financial
The main advantage of trading using opposite First Capital and PNC Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Capital 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.| First Capital vs. KeyCorp | First Capital vs. Comerica | First Capital vs. First Horizon National | First Capital vs. Western Alliance Bancorporation |
| PNC Financial vs. Truist Financial Corp | PNC Financial vs. KeyCorp | PNC Financial vs. Western Alliance Bancorporation | PNC Financial vs. Zions Bancorporation |
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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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