Correlation Between PNC Financial and CARSALES

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Can any of the company-specific risk be diversified away by investing in both PNC Financial and CARSALES 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 CARSALES 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 CARSALESCOM, you can compare the effects of market volatilities on PNC Financial and CARSALES 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 CARSALES. Check out your portfolio center. Please also check ongoing floating volatility patterns of PNC Financial and CARSALES.

Diversification Opportunities for PNC Financial and CARSALES

0.73
  Correlation Coefficient

Poor diversification

The 3 months correlation between PNC and CARSALES is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding PNC Financial Services and CARSALESCOM in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CARSALESCOM 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 CARSALES. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CARSALESCOM has no effect on the direction of PNC Financial i.e., PNC Financial and CARSALES go up and down completely randomly.

Pair Corralation between PNC Financial and CARSALES

Assuming the 90 days trading horizon PNC Financial Services is expected to generate 0.99 times more return on investment than CARSALES. However, PNC Financial Services is 1.01 times less risky than CARSALES. It trades about 0.1 of its potential returns per unit of risk. CARSALESCOM is currently generating about 0.06 per unit of risk. If you would invest  13,174  in PNC Financial Services on November 3, 2024 and sell it today you would earn a total of  6,026  from holding PNC Financial Services or generate 45.74% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

PNC Financial Services  vs.  CARSALESCOM

 Performance 
       Timeline  
PNC Financial Services 

Risk-Adjusted Performance

9 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in PNC Financial Services are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, PNC Financial unveiled solid returns over the last few months and may actually be approaching a breakup point.
CARSALESCOM 

Risk-Adjusted Performance

6 of 100

 
Weak
 
Strong
Modest
Compared to the overall equity markets, risk-adjusted returns on investments in CARSALESCOM are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain basic indicators, CARSALES may actually be approaching a critical reversion point that can send shares even higher in March 2025.

PNC Financial and CARSALES Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with PNC Financial and CARSALES

The main advantage of trading using opposite PNC Financial and CARSALES positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PNC Financial position performs unexpectedly, CARSALES 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 CARSALES will offset losses from the drop in CARSALES's long position.
The idea behind PNC Financial Services and CARSALESCOM pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.

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