Correlation Between Intesa Sanpaolo and PNC Financial

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

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

Diversification Opportunities for Intesa Sanpaolo and PNC Financial

-0.46

Correlation Coefficient

Intesa Sanpaolo  PNC Financial

Very good diversification

The 3 months correlation between Intesa and PNC is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding Intesa Sanpaolo SpA 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 Intesa Sanpaolo 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 Intesa Sanpaolo SpA 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 Intesa Sanpaolo i.e., Intesa Sanpaolo and PNC Financial go up and down completely randomly.

Pair Corralation between Intesa Sanpaolo and PNC Financial

Assuming the 90 days horizon Intesa Sanpaolo SpA is expected to generate 1.28 times more return on investment than PNC Financial. However, Intesa Sanpaolo is 1.28 times more volatile than PNC Financial Services. It trades about 0.2 of its potential returns per unit of risk. PNC Financial Services is currently generating about -0.18 per unit of risk. If you would invest  2,313  in Intesa Sanpaolo SpA on September 13, 2024 and sell it today you would earn a total of  116.00  from holding Intesa Sanpaolo SpA or generate 5.02% return on investment over 90 days.

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

Intesa Sanpaolo SpA  vs.  PNC Financial Services

Intesa Sanpaolo SpA

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Intesa Sanpaolo SpA are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong basic indicators, Intesa Sanpaolo is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

PNC Financial Services

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in PNC Financial Services are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady basic indicators, PNC Financial exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Intesa Sanpaolo and PNC Financial

The main advantage of trading using opposite Intesa Sanpaolo and PNC Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Intesa Sanpaolo 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 Intesa Sanpaolo SpA 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..