Correlation Between Aquagold International and PNC Financial

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

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

Diversification Opportunities for Aquagold International and PNC Financial

0.24

Correlation Coefficient

Aquagold International  PNC Financial

Modest diversification

The 3 months correlation between Aquagold and PNC is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Aquagold International 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 Aquagold International 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 Aquagold International 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 Aquagold International i.e., Aquagold International and PNC Financial go up and down completely randomly.

Pair Corralation between Aquagold International and PNC Financial

Given the investment horizon of 90 days Aquagold International is expected to under-perform the PNC Financial. In addition to that, Aquagold International is 4.46 times more volatile than PNC Financial Services. It trades about -0.13 of its total potential returns per unit of risk. PNC Financial Services is currently generating about -0.12 per unit of volatility. If you would invest  19,318  in PNC Financial Services on December 25, 2024 and sell it today you would lose (1,957) from holding PNC Financial Services or give up 10.13% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	95.16%
Values	Daily Returns

Aquagold International  vs.  PNC Financial Services

Aquagold International

Risk-Adjusted Performance

Very Weak

Over the last 90 days Aquagold International has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in April 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

PNC Financial Services

Risk-Adjusted Performance

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 latest unsteady performance, the Stock's basic indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Pair Trading with Aquagold International and PNC Financial

The main advantage of trading using opposite Aquagold International and PNC Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aquagold International 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 Aquagold International 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.