Correlation Between PNC Financial and EBRO FOODS
Can any of the company-specific risk be diversified away by investing in both PNC Financial and EBRO FOODS 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 EBRO FOODS 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 EBRO FOODS, you can compare the effects of market volatilities on PNC Financial and EBRO FOODS 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 EBRO FOODS. Check out your portfolio center. Please also check ongoing floating volatility patterns of PNC Financial and EBRO FOODS.
Diversification Opportunities for PNC Financial and EBRO FOODS
-0.54 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between PNC and EBRO is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding PNC Financial Services and EBRO FOODS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EBRO FOODS 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 EBRO FOODS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EBRO FOODS has no effect on the direction of PNC Financial i.e., PNC Financial and EBRO FOODS go up and down completely randomly.
Pair Corralation between PNC Financial and EBRO FOODS
Assuming the 90 days trading horizon PNC Financial Services is expected to under-perform the EBRO FOODS. In addition to that, PNC Financial is 1.63 times more volatile than EBRO FOODS. It trades about -0.08 of its total potential returns per unit of risk. EBRO FOODS is currently generating about 0.02 per unit of volatility. If you would invest 1,572 in EBRO FOODS on October 30, 2024 and sell it today you would earn a total of 8.00 from holding EBRO FOODS or generate 0.51% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
PNC Financial Services vs. EBRO FOODS
Performance |
| Timeline |
| PNC Financial Services |
| EBRO FOODS |
PNC Financial and EBRO FOODS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PNC Financial and EBRO FOODS
The main advantage of trading using opposite PNC Financial and EBRO FOODS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PNC Financial position performs unexpectedly, EBRO FOODS 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 EBRO FOODS will offset losses from the drop in EBRO FOODS's long position.| PNC Financial vs. United Utilities Group | PNC Financial vs. NORTHEAST UTILITIES | PNC Financial vs. BANK OF CHINA | PNC Financial vs. Chiba Bank |
| EBRO FOODS vs. Inspire Medical Systems | EBRO FOODS vs. MidCap Financial Investment | EBRO FOODS vs. SLR Investment Corp | EBRO FOODS vs. MGIC INVESTMENT |
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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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