Correlation Between MT Bank and PNC Financial

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

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

Diversification Opportunities for MT Bank and PNC Financial

0.93

Correlation Coefficient

MT Bank  PNC Financial

Almost no diversification

The 3 months correlation between MTZ and PNC is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding MT Bank Corp and The PNC Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PNC Financial and MT Bank 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 MT Bank Corp 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 MT Bank i.e., MT Bank and PNC Financial go up and down completely randomly.

Pair Corralation between MT Bank and PNC Financial

Assuming the 90 days horizon MT Bank is expected to generate 1.93 times less return on investment than PNC Financial. In addition to that, MT Bank is 1.2 times more volatile than The PNC Financial. It trades about 0.05 of its total potential returns per unit of risk. The PNC Financial is currently generating about 0.12 per unit of volatility. If you would invest  17,053  in The PNC Financial on October 21, 2024 and sell it today you would earn a total of  2,247  from holding The PNC Financial or generate 13.18% return on investment over 90 days.

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

MT Bank Corp  vs.  The PNC Financial

MT Bank Corp

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in MT Bank Corp are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, MT Bank may actually be approaching a critical reversion point that can send shares even higher in February 2025.

PNC Financial

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in The PNC Financial are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, PNC Financial reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with MT Bank and PNC Financial

The main advantage of trading using opposite MT Bank and PNC Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MT Bank 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 MT Bank Corp 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.