Correlation Between Delta Electronics and PNC Financial

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

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

Diversification Opportunities for Delta Electronics and PNC Financial

0.87

Correlation Coefficient

Delta Electronics  PNC Financial

Very poor diversification

The 3 months correlation between Delta and PNC is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Delta Electronics Public and The PNC Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PNC Financial and Delta Electronics 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 Delta Electronics Public 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 Delta Electronics i.e., Delta Electronics and PNC Financial go up and down completely randomly.

Pair Corralation between Delta Electronics and PNC Financial

Assuming the 90 days trading horizon Delta Electronics Public is expected to under-perform the PNC Financial. In addition to that, Delta Electronics is 4.14 times more volatile than The PNC Financial. It trades about -0.15 of its total potential returns per unit of risk. The PNC Financial is currently generating about -0.35 per unit of volatility. If you would invest  19,400  in The PNC Financial on October 8, 2024 and sell it today you would lose (1,000.00) from holding The PNC Financial or give up 5.15% of portfolio value over 90 days.

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

Delta Electronics Public  vs.  The PNC Financial

Delta Electronics Public

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Delta Electronics Public are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Delta Electronics reported solid returns over the last few months and may actually be approaching a breakup point.

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 Delta Electronics and PNC Financial

The main advantage of trading using opposite Delta Electronics and PNC Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Delta Electronics 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 Delta Electronics Public 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.