Correlation Between PNC Financial and First Community
Can any of the company-specific risk be diversified away by investing in both PNC Financial and First Community 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 PNC Financial and First Community into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PNC Financial Services and First Community Bancshares, you can compare the effects of market volatilities on PNC Financial and First Community 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 PNC Financial with a short position of First Community. Check out your portfolio center. Please also check ongoing floating volatility patterns of PNC Financial and First Community.
Diversification Opportunities for PNC Financial and First Community
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between PNC and First is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding PNC Financial Services and First Community Bancshares in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Community Banc and PNC 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 PNC Financial Services are associated (or correlated) with First Community. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Community Banc has no effect on the direction of PNC Financial i.e., PNC Financial and First Community go up and down completely randomly.
Pair Corralation between PNC Financial and First Community
Considering the 90-day investment horizon PNC Financial is expected to generate 1.19 times less return on investment than First Community. But when comparing it to its historical volatility, PNC Financial Services is 1.82 times less risky than First Community. It trades about 0.27 of its potential returns per unit of risk. First Community Bancshares is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest 4,083 in First Community Bancshares on August 26, 2024 and sell it today you would earn a total of 599.00 from holding First Community Bancshares or generate 14.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
PNC Financial Services vs. First Community Bancshares
Performance |
| Timeline |
| PNC Financial Services |
| First Community Banc |
PNC Financial and First Community Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PNC Financial and First Community
The main advantage of trading using opposite PNC Financial and First Community positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PNC Financial position performs unexpectedly, First Community 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 First Community will offset losses from the drop in First Community's long position.| PNC Financial vs. Truist Financial Corp | PNC Financial vs. KeyCorp | PNC Financial vs. Western Alliance Bancorporation | PNC Financial vs. Zions Bancorporation |
| First Community vs. Fifth Third Bancorp | First Community vs. Zions Bancorporation | First Community vs. Huntington Bancshares Incorporated | First Community vs. PNC Financial Services |
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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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