Correlation Between Cullman Bancorp and PNC Financial

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Can any of the company-specific risk be diversified away by investing in both Cullman Bancorp 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 Cullman Bancorp and PNC Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cullman Bancorp and PNC Financial Services, you can compare the effects of market volatilities on Cullman Bancorp 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 Cullman Bancorp with a short position of PNC Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cullman Bancorp and PNC Financial.

Diversification Opportunities for Cullman Bancorp and PNC Financial

-0.38
  Correlation Coefficient

Very good diversification

The 3 months correlation between Cullman and PNC is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding Cullman Bancorp 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 Cullman Bancorp 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 Cullman Bancorp 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 Cullman Bancorp i.e., Cullman Bancorp and PNC Financial go up and down completely randomly.

Pair Corralation between Cullman Bancorp and PNC Financial

Given the investment horizon of 90 days Cullman Bancorp is expected to under-perform the PNC Financial. But the stock apears to be less risky and, when comparing its historical volatility, Cullman Bancorp is 1.07 times less risky than PNC Financial. The stock trades about -0.2 of its potential returns per unit of risk. The PNC Financial Services is currently generating about 0.27 of returns per unit of risk over similar time horizon. If you would invest  14,595  in PNC Financial Services on December 29, 2023 and sell it today you would earn a total of  1,553  from holding PNC Financial Services or generate 10.64% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy91.3%
ValuesDaily Returns

Cullman Bancorp  vs.  PNC Financial Services

 Performance 
       Timeline  
Cullman Bancorp 

Risk-Adjusted Performance

0 of 100

 
Low
 
High
Very Weak
Over the last 90 days Cullman Bancorp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unfluctuating performance, the Stock's essential indicators remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.
PNC Financial Services 

Risk-Adjusted Performance

3 of 100

 
Low
 
High
Insignificant
Compared to the overall equity markets, risk-adjusted returns on investments in PNC Financial Services are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, PNC Financial is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

Cullman Bancorp and PNC Financial Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Cullman Bancorp and PNC Financial

The main advantage of trading using opposite Cullman Bancorp and PNC Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cullman Bancorp 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.
The idea behind Cullman Bancorp and PNC Financial Services 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.
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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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.

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