Correlation Between Virginia National and PNC Financial
Can any of the company-specific risk be diversified away by investing in both Virginia National 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 Virginia National and PNC Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Virginia National Bankshares and PNC Financial Services, you can compare the effects of market volatilities on Virginia National 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 Virginia National with a short position of PNC Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Virginia National and PNC Financial.
Diversification Opportunities for Virginia National and PNC Financial
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Virginia and PNC is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Virginia National Bankshares 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 Virginia National 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 Virginia National Bankshares 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 Virginia National i.e., Virginia National and PNC Financial go up and down completely randomly.
Pair Corralation between Virginia National and PNC Financial
Given the investment horizon of 90 days Virginia National is expected to generate 3.16 times less return on investment than PNC Financial. But when comparing it to its historical volatility, Virginia National Bankshares is 1.21 times less risky than PNC Financial. It trades about 0.1 of its potential returns per unit of risk. PNC Financial Services is currently generating about 0.26 of returns per unit of risk over similar time horizon. If you would invest 18,983 in PNC Financial Services on August 27, 2024 and sell it today you would earn a total of 2,264 from holding PNC Financial Services or generate 11.93% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Virginia National Bankshares vs. PNC Financial Services
Performance |
| Timeline |
| Virginia National |
| PNC Financial Services |
Virginia National and PNC Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Virginia National and PNC Financial
The main advantage of trading using opposite Virginia National and PNC Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Virginia National 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.| Virginia National vs. Fifth Third Bancorp | Virginia National vs. Zions Bancorporation | Virginia National vs. Huntington Bancshares Incorporated | Virginia National vs. Comerica |
| PNC Financial vs. Fifth Third Bancorp | PNC Financial vs. Zions Bancorporation | PNC Financial vs. Huntington Bancshares Incorporated | PNC Financial vs. Comerica |
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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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