Correlation Between PNC Financial and US Bancorp
Can any of the company-specific risk be diversified away by investing in both PNC Financial and US Bancorp 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 US Bancorp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between The PNC Financial and US Bancorp, you can compare the effects of market volatilities on PNC Financial and US Bancorp 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 US Bancorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of PNC Financial and US Bancorp.
Diversification Opportunities for PNC Financial and US Bancorp
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between PNC and UB5 is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding The PNC Financial and US Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on US Bancorp 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 The PNC Financial are associated (or correlated) with US Bancorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of US Bancorp has no effect on the direction of PNC Financial i.e., PNC Financial and US Bancorp go up and down completely randomly.
Pair Corralation between PNC Financial and US Bancorp
Assuming the 90 days horizon The PNC Financial is expected to generate 0.8 times more return on investment than US Bancorp. However, The PNC Financial is 1.26 times less risky than US Bancorp. It trades about 0.05 of its potential returns per unit of risk. US Bancorp is currently generating about 0.02 per unit of risk. If you would invest 13,406 in The PNC Financial on November 19, 2024 and sell it today you would earn a total of 5,194 from holding The PNC Financial or generate 38.74% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
The PNC Financial vs. US Bancorp
Performance |
| Timeline |
| PNC Financial |
| US Bancorp |
PNC Financial and US Bancorp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PNC Financial and US Bancorp
The main advantage of trading using opposite PNC Financial and US Bancorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PNC Financial position performs unexpectedly, US Bancorp 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 US Bancorp will offset losses from the drop in US Bancorp's long position.| PNC Financial vs. KOBE STEEL LTD | PNC Financial vs. Tower One Wireless | PNC Financial vs. Insteel Industries | PNC Financial vs. MAVEN WIRELESS SWEDEN |
| US Bancorp vs. Sims Metal Management | US Bancorp vs. COLUMBIA SPORTSWEAR | US Bancorp vs. JAPAN TOBACCO UNSPADR12 | US Bancorp vs. Jupiter Fund Management |
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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