Correlation Between Susquehanna Community and PNC Financial

Can any of the company-specific risk be diversified away by investing in both Susquehanna Community 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 Susquehanna Community and PNC Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Susquehanna Community Financial and PNC Financial Services, you can compare the effects of market volatilities on Susquehanna Community 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 Susquehanna Community with a short position of PNC Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Susquehanna Community and PNC Financial.

Diversification Opportunities for Susquehanna Community and PNC Financial

0.22

Correlation Coefficient

Susquehanna Community  PNC Financial

Modest diversification

The 3 months correlation between Susquehanna and PNC is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Susquehanna Community Financia 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 Susquehanna Community 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 Susquehanna Community 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 Susquehanna Community i.e., Susquehanna Community and PNC Financial go up and down completely randomly.

Pair Corralation between Susquehanna Community and PNC Financial

Given the investment horizon of 90 days Susquehanna Community Financial is expected to generate 0.7 times more return on investment than PNC Financial. However, Susquehanna Community Financial is 1.42 times less risky than PNC Financial. It trades about 0.19 of its potential returns per unit of risk. PNC Financial Services is currently generating about -0.08 per unit of risk. If you would invest  1,052  in Susquehanna Community Financial on January 20, 2024 and sell it today you would earn a total of  48.00  from holding Susquehanna Community Financial or generate 4.56% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Susquehanna Community Financia  vs.  PNC Financial Services

Susquehanna Community

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Susquehanna Community Financial are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable fundamental indicators, Susquehanna Community is not utilizing all of its potentials. The recent stock price disturbance, may contribute to mid-run losses for the stockholders.

PNC Financial Services

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days PNC Financial Services has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, PNC Financial is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Susquehanna Community and PNC Financial

The main advantage of trading using opposite Susquehanna Community and PNC Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Susquehanna Community 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 Susquehanna Community 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.

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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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.