Correlation Between Stifel Financial and PNC Financial

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

Diversification Opportunities for Stifel Financial and PNC Financial

-0.11
  Correlation Coefficient

Good diversification

The 3 months correlation between Stifel and PNC is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding Stifel Financial 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 Stifel 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 Stifel Financial 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 Stifel Financial i.e., Stifel Financial and PNC Financial go up and down completely randomly.

Pair Corralation between Stifel Financial and PNC Financial

Allowing for the 90-day total investment horizon Stifel Financial is expected to generate 8.99 times less return on investment than PNC Financial. But when comparing it to its historical volatility, Stifel Financial is 1.71 times less risky than PNC Financial. It trades about 0.05 of its potential returns per unit of risk. 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
Accuracy95.65%
ValuesDaily Returns

Stifel Financial  vs.  PNC Financial Services

 Performance 
       Timeline  
Stifel Financial 

Risk-Adjusted Performance

13 of 100

 
Low
 
High
Good
Compared to the overall equity markets, risk-adjusted returns on investments in Stifel Financial are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite nearly abnormal technical and fundamental indicators, Stifel Financial reported solid returns over the last few months and may actually be approaching a breakup point.
PNC Financial Services 

Risk-Adjusted Performance

4 of 100

 
Low
 
High
Insignificant
Compared to the overall equity markets, risk-adjusted returns on investments in PNC Financial Services are ranked lower than 4 (%) 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.

Stifel Financial and PNC Financial Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Stifel Financial and PNC Financial

The main advantage of trading using opposite Stifel Financial and PNC Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Stifel Financial 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 Stifel Financial 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.
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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.

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