Correlation Between National Bank and PNC Financial
Can any of the company-specific risk be diversified away by investing in both National Bank 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 National Bank and PNC Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between National Bank Holdings and The PNC Financial, you can compare the effects of market volatilities on National Bank 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 National Bank with a short position of PNC Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of National Bank and PNC Financial.
Diversification Opportunities for National Bank and PNC Financial
0.4 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between National and PNC is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding National Bank Holdings and The PNC Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PNC Financial and National Bank 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 National Bank Holdings 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 has no effect on the direction of National Bank i.e., National Bank and PNC Financial go up and down completely randomly.
Pair Corralation between National Bank and PNC Financial
Assuming the 90 days horizon National Bank is expected to generate 2.68 times less return on investment than PNC Financial. In addition to that, National Bank is 1.37 times more volatile than The PNC Financial. It trades about 0.04 of its total potential returns per unit of risk. The PNC Financial is currently generating about 0.15 per unit of volatility. If you would invest 14,045 in The PNC Financial on January 26, 2024 and sell it today you would earn a total of 655.00 from holding The PNC Financial or generate 4.66% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.24% |
| Values | Daily Returns |
National Bank Holdings vs. The PNC Financial
Performance |
| Timeline |
| National Bank Holdings |
| PNC Financial |
National Bank and PNC Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with National Bank and PNC Financial
The main advantage of trading using opposite National Bank and PNC Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if National Bank 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.| National Bank vs. Superior Plus Corp | National Bank vs. Origin Agritech | National Bank vs. Identiv | National Bank vs. INTUITIVE SURGICAL |
| PNC Financial vs. JAPAN TOBACCO UNSPADR12 | PNC Financial vs. British American Tobacco | PNC Financial vs. TYSON FOODS A | PNC Financial vs. G III APPAREL GROUP |
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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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