Correlation Between EIDESVIK OFFSHORE and PNC Financial

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

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

Diversification Opportunities for EIDESVIK OFFSHORE and PNC Financial

0.64

Correlation Coefficient

EIDESVIK OFFSHORE  PNC Financial

Poor diversification

The 3 months correlation between EIDESVIK and PNC is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding EIDESVIK OFFSHORE NK 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 EIDESVIK OFFSHORE 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 EIDESVIK OFFSHORE NK 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 EIDESVIK OFFSHORE i.e., EIDESVIK OFFSHORE and PNC Financial go up and down completely randomly.

Pair Corralation between EIDESVIK OFFSHORE and PNC Financial

Assuming the 90 days horizon EIDESVIK OFFSHORE NK is expected to generate 1.53 times more return on investment than PNC Financial. However, EIDESVIK OFFSHORE is 1.53 times more volatile than PNC Financial Services. It trades about -0.05 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  109.00  in EIDESVIK OFFSHORE NK on December 20, 2024 and sell it today you would lose (11.00) from holding EIDESVIK OFFSHORE NK or give up 10.09% of portfolio value over 90 days.

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

EIDESVIK OFFSHORE NK  vs.  PNC Financial Services

EIDESVIK OFFSHORE

Risk-Adjusted Performance

Very Weak

Over the last 90 days EIDESVIK OFFSHORE NK has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unsteady performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

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 uncertain performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with EIDESVIK OFFSHORE and PNC Financial

The main advantage of trading using opposite EIDESVIK OFFSHORE and PNC Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if EIDESVIK OFFSHORE 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 EIDESVIK OFFSHORE NK 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.