Correlation Between Granite Construction and PNC Financial

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

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

Diversification Opportunities for Granite Construction and PNC Financial

0.55

Correlation Coefficient

Granite Construction  PNC Financial

Very weak diversification

The 3 months correlation between Granite and PNC is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Granite Construction and The PNC Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PNC Financial and Granite Construction 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 Granite Construction 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 has no effect on the direction of Granite Construction i.e., Granite Construction and PNC Financial go up and down completely randomly.

Pair Corralation between Granite Construction and PNC Financial

Assuming the 90 days trading horizon Granite Construction is expected to under-perform the PNC Financial. In addition to that, Granite Construction is 1.18 times more volatile than The PNC Financial. It trades about -0.23 of its total potential returns per unit of risk. The PNC Financial is currently generating about -0.14 per unit of volatility. If you would invest  18,342  in The PNC Financial on December 21, 2024 and sell it today you would lose (2,442) from holding The PNC Financial or give up 13.31% of portfolio value over 90 days.

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

Granite Construction  vs.  The PNC Financial

Granite Construction

Risk-Adjusted Performance

Very Weak

Over the last 90 days Granite Construction has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

PNC Financial

Risk-Adjusted Performance

Very Weak

Over the last 90 days The PNC Financial has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Granite Construction and PNC Financial

The main advantage of trading using opposite Granite Construction and PNC Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Granite Construction 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 Granite Construction and The PNC Financial 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.