Correlation Between NORTHEAST UTILITIES and PNC Financial
Can any of the company-specific risk be diversified away by investing in both NORTHEAST UTILITIES 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 NORTHEAST UTILITIES and PNC Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NORTHEAST UTILITIES and PNC Financial Services, you can compare the effects of market volatilities on NORTHEAST UTILITIES 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 NORTHEAST UTILITIES with a short position of PNC Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of NORTHEAST UTILITIES and PNC Financial.
Diversification Opportunities for NORTHEAST UTILITIES and PNC Financial
0.23 | Correlation Coefficient |
Modest diversification
The 3 months correlation between NORTHEAST and PNC is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding NORTHEAST UTILITIES 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 NORTHEAST UTILITIES 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 NORTHEAST UTILITIES 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 NORTHEAST UTILITIES i.e., NORTHEAST UTILITIES and PNC Financial go up and down completely randomly.
Pair Corralation between NORTHEAST UTILITIES and PNC Financial
Assuming the 90 days trading horizon NORTHEAST UTILITIES is expected to generate 1.14 times more return on investment than PNC Financial. However, NORTHEAST UTILITIES is 1.14 times more volatile than PNC Financial Services. It trades about 0.11 of its potential returns per unit of risk. PNC Financial Services is currently generating about 0.09 per unit of risk. If you would invest 5,400 in NORTHEAST UTILITIES on November 7, 2024 and sell it today you would earn a total of 200.00 from holding NORTHEAST UTILITIES or generate 3.7% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 91.3% |
| Values | Daily Returns |
NORTHEAST UTILITIES vs. PNC Financial Services
Performance |
| Timeline |
| NORTHEAST UTILITIES |
| PNC Financial Services |
NORTHEAST UTILITIES and PNC Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NORTHEAST UTILITIES and PNC Financial
The main advantage of trading using opposite NORTHEAST UTILITIES and PNC Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NORTHEAST UTILITIES 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.| NORTHEAST UTILITIES vs. CORNISH METALS INC | NORTHEAST UTILITIES vs. MCEWEN MINING INC | NORTHEAST UTILITIES vs. Monster Beverage Corp | NORTHEAST UTILITIES vs. SAN MIGUEL BREWERY |
| PNC Financial vs. Apple Inc | PNC Financial vs. Apple Inc | PNC Financial vs. Apple Inc | PNC Financial vs. Apple Inc |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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