Correlation Between MT Bank and PNC Financial
Can any of the company-specific risk be diversified away by investing in both MT Bank 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 MT Bank and PNC Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between MT Bank and PNC Financial Services, you can compare the effects of market volatilities on MT Bank 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 MT Bank with a short position of PNC Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of MT Bank and PNC Financial.
Diversification Opportunities for MT Bank and PNC Financial
0.92 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between MTB and PNC is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding MT Bank 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 MT Bank 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 MT Bank 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 MT Bank i.e., MT Bank and PNC Financial go up and down completely randomly.
Pair Corralation between MT Bank and PNC Financial
Considering the 90-day investment horizon MT Bank is expected to generate 0.95 times more return on investment than PNC Financial. However, MT Bank is 1.05 times less risky than PNC Financial. It trades about 0.23 of its potential returns per unit of risk. PNC Financial Services is currently generating about 0.19 per unit of risk. If you would invest 18,542 in MT Bank on October 20, 2024 and sell it today you would earn a total of 1,134 from holding MT Bank or generate 6.12% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
MT Bank vs. PNC Financial Services
Performance |
| Timeline |
| MT Bank |
| PNC Financial Services |
MT Bank and PNC Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MT Bank and PNC Financial
The main advantage of trading using opposite MT Bank and PNC Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MT Bank 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.| MT Bank vs. US Bancorp | MT Bank vs. Truist Financial Corp | MT Bank vs. Fifth Third Bancorp | MT Bank vs. KeyCorp |
| 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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