Correlation Between Credit Agricole and PNC Financial

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

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

Diversification Opportunities for Credit Agricole and PNC Financial

0.15

Correlation Coefficient

Credit Agricole  PNC Financial

Average diversification

The 3 months correlation between Credit and PNC is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Credit Agricole SA 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 Credit Agricole 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 Credit Agricole SA 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 Credit Agricole i.e., Credit Agricole and PNC Financial go up and down completely randomly.

Pair Corralation between Credit Agricole and PNC Financial

Assuming the 90 days horizon Credit Agricole SA is expected to generate 0.92 times more return on investment than PNC Financial. However, Credit Agricole SA is 1.09 times less risky than PNC Financial. It trades about 0.36 of its potential returns per unit of risk. PNC Financial Services is currently generating about -0.11 per unit of risk. If you would invest  656.00  in Credit Agricole SA on December 4, 2024 and sell it today you would earn a total of  179.00  from holding Credit Agricole SA or generate 27.29% return on investment over 90 days.

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

Credit Agricole SA  vs.  PNC Financial Services

Credit Agricole SA

Risk-Adjusted Performance

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Credit Agricole SA are ranked lower than 28 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Credit Agricole showed solid returns over the last few months and may actually be approaching a breakup point.

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 Credit Agricole and PNC Financial

The main advantage of trading using opposite Credit Agricole and PNC Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Credit Agricole 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 Credit Agricole SA 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.