Correlation Between PNC Financial and Alpha Bank

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

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

Diversification Opportunities for PNC Financial and Alpha Bank

-0.5

Correlation Coefficient

PNC Financial  Alpha Bank

Very good diversification

The 3 months correlation between PNC and Alpha is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding PNC Financial Services and Alpha Bank SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alpha Bank SA and PNC Financial 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 PNC Financial Services are associated (or correlated) with Alpha Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alpha Bank SA has no effect on the direction of PNC Financial i.e., PNC Financial and Alpha Bank go up and down completely randomly.

Pair Corralation between PNC Financial and Alpha Bank

Considering the 90-day investment horizon PNC Financial Services is expected to generate 0.46 times more return on investment than Alpha Bank. However, PNC Financial Services is 2.19 times less risky than Alpha Bank. It trades about 0.15 of its potential returns per unit of risk. Alpha Bank SA is currently generating about 0.02 per unit of risk. If you would invest  17,612  in PNC Financial Services on September 12, 2024 and sell it today you would earn a total of  2,726  from holding PNC Financial Services or generate 15.48% return on investment over 90 days.

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

PNC Financial Services  vs.  Alpha Bank SA

PNC Financial Services

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in PNC Financial Services are ranked lower than 11 (%) 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.

Alpha Bank SA

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Alpha Bank SA are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong forward-looking signals, Alpha Bank is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with PNC Financial and Alpha Bank

The main advantage of trading using opposite PNC Financial and Alpha Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PNC Financial position performs unexpectedly, Alpha Bank 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 Alpha Bank will offset losses from the drop in Alpha Bank's long position.

The idea behind PNC Financial Services and Alpha Bank SA 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.