Correlation Between Lendlease and PNC Financial

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

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

Diversification Opportunities for Lendlease and PNC Financial

0.36

Correlation Coefficient

Lendlease  PNC Financial

Weak diversification

The 3 months correlation between Lendlease and PNC is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Lendlease Group and The PNC Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PNC Financial and Lendlease 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 Lendlease Group 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 Lendlease i.e., Lendlease and PNC Financial go up and down completely randomly.

Pair Corralation between Lendlease and PNC Financial

Assuming the 90 days trading horizon Lendlease Group is expected to under-perform the PNC Financial. In addition to that, Lendlease is 1.54 times more volatile than The PNC Financial. It trades about -0.27 of its total potential returns per unit of risk. The PNC Financial is currently generating about -0.13 per unit of volatility. If you would invest  19,400  in The PNC Financial on October 10, 2024 and sell it today you would lose (500.00) from holding The PNC Financial or give up 2.58% of portfolio value over 90 days.

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

Lendlease Group  vs.  The PNC Financial

Lendlease Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Lendlease Group 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 stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

PNC Financial

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in The PNC Financial are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, PNC Financial reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Lendlease and PNC Financial

The main advantage of trading using opposite Lendlease and PNC Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lendlease 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 Lendlease Group 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.

Check out your portfolio center.

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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.