Correlation Between PNC Technologies and EV Advanced

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

By analyzing existing cross correlation between PNC Technologies co and EV Advanced Material, you can compare the effects of market volatilities on PNC Technologies and EV Advanced 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 PNC Technologies with a short position of EV Advanced. Check out your portfolio center. Please also check ongoing floating volatility patterns of PNC Technologies and EV Advanced.

Diversification Opportunities for PNC Technologies and EV Advanced

0.18

Correlation Coefficient

PNC Technologies  EV Advanced

Average diversification

The 3 months correlation between PNC and 131400 is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding PNC Technologies co and EV Advanced Material in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EV Advanced Material and PNC Technologies 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 PNC Technologies co are associated (or correlated) with EV Advanced. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EV Advanced Material has no effect on the direction of PNC Technologies i.e., PNC Technologies and EV Advanced go up and down completely randomly.

Pair Corralation between PNC Technologies and EV Advanced

Assuming the 90 days trading horizon PNC Technologies co is expected to under-perform the EV Advanced. But the stock apears to be less risky and, when comparing its historical volatility, PNC Technologies co is 1.51 times less risky than EV Advanced. The stock trades about -0.02 of its potential returns per unit of risk. The EV Advanced Material is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest  185,800  in EV Advanced Material on December 24, 2024 and sell it today you would lose (5,100) from holding EV Advanced Material or give up 2.74% of portfolio value over 90 days.

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

PNC Technologies co  vs.  EV Advanced Material

PNC Technologies

Risk-Adjusted Performance

Very Weak

Over the last 90 days PNC Technologies co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, PNC Technologies is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

EV Advanced Material

Risk-Adjusted Performance

Very Weak

Over the last 90 days EV Advanced Material has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, EV Advanced is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with PNC Technologies and EV Advanced

The main advantage of trading using opposite PNC Technologies and EV Advanced positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PNC Technologies position performs unexpectedly, EV Advanced 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 EV Advanced will offset losses from the drop in EV Advanced's long position.

The idea behind PNC Technologies co and EV Advanced Material 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..