Correlation Between Federated International and Pnc International

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

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

Diversification Opportunities for Federated International and Pnc International

0.97

Correlation Coefficient

Federated International  Pnc International

Almost no diversification

The 3 months correlation between Federated and Pnc is 0.97. Overlapping area represents the amount of risk that can be diversified away by holding Federated International Leader and Pnc International Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pnc International Equity and Federated 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 Federated International Leaders are associated (or correlated) with Pnc International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pnc International Equity has no effect on the direction of Federated International i.e., Federated International and Pnc International go up and down completely randomly.

Pair Corralation between Federated International and Pnc International

Assuming the 90 days horizon Federated International Leaders is expected to under-perform the Pnc International. In addition to that, Federated International is 1.4 times more volatile than Pnc International Equity. It trades about -0.18 of its total potential returns per unit of risk. Pnc International Equity is currently generating about -0.16 per unit of volatility. If you would invest  2,335  in Pnc International Equity on September 20, 2024 and sell it today you would lose (52.00) from holding Pnc International Equity or give up 2.23% of portfolio value over 90 days.

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

Federated International Leader  vs.  Pnc International Equity

Federated International

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Federated International Leaders has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Pnc International Equity

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Pnc International Equity has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong fundamental indicators, Pnc International is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Federated International and Pnc International

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

The idea behind Federated International Leaders and Pnc International Equity 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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.