Correlation Between BANK OF CHINA and PNC Financial
Can any of the company-specific risk be diversified away by investing in both BANK OF CHINA 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 BANK OF CHINA and PNC Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BANK OF CHINA and PNC Financial Services, you can compare the effects of market volatilities on BANK OF CHINA 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 BANK OF CHINA with a short position of PNC Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of BANK OF CHINA and PNC Financial.
Diversification Opportunities for BANK OF CHINA and PNC Financial
0.12 | Correlation Coefficient |
Average diversification
The 3 months correlation between BANK and PNC is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding BANK OF CHINA 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 BANK OF CHINA 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 BANK OF CHINA 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 BANK OF CHINA i.e., BANK OF CHINA and PNC Financial go up and down completely randomly.
Pair Corralation between BANK OF CHINA and PNC Financial
Assuming the 90 days trading horizon BANK OF CHINA is expected to generate 5.44 times more return on investment than PNC Financial. However, BANK OF CHINA is 5.44 times more volatile than PNC Financial Services. It trades about 0.24 of its potential returns per unit of risk. PNC Financial Services is currently generating about 0.09 per unit of risk. If you would invest 36.00 in BANK OF CHINA on November 7, 2024 and sell it today you would earn a total of 14.00 from holding BANK OF CHINA or generate 38.89% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
BANK OF CHINA vs. PNC Financial Services
Performance |
| Timeline |
| BANK OF CHINA |
| PNC Financial Services |
BANK OF CHINA and PNC Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BANK OF CHINA and PNC Financial
The main advantage of trading using opposite BANK OF CHINA and PNC Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BANK OF CHINA 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.| BANK OF CHINA vs. SIVERS SEMICONDUCTORS AB | BANK OF CHINA vs. NorAm Drilling AS | BANK OF CHINA vs. Volkswagen AG | BANK OF CHINA vs. Darden Restaurants |
| PNC Financial vs. Apple Inc | PNC Financial vs. Apple Inc | PNC Financial vs. Apple Inc | PNC Financial vs. Apple Inc |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
Other Complementary Tools
| Price Exposure Probability Analyze equity upside and downside potential for a given time horizon across multiple markets | |
| Portfolio Volatility Check portfolio volatility and analyze historical return density to properly model market risk | |
| Portfolio Comparator Compare the composition, asset allocations and performance of any two portfolios in your account | |
| Watchlist Optimization Optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm | |
| Idea Breakdown Analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes |