Correlation Between PNC Financial and Coastal Carolina

Can any of the company-specific risk be diversified away by investing in both PNC Financial and Coastal Carolina 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 Coastal Carolina 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 Coastal Carolina Bancshares, you can compare the effects of market volatilities on PNC Financial and Coastal Carolina 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 Coastal Carolina. Check out your portfolio center. Please also check ongoing floating volatility patterns of PNC Financial and Coastal Carolina.

Diversification Opportunities for PNC Financial and Coastal Carolina

0.64

Correlation Coefficient

PNC Financial  Coastal Carolina

Poor diversification

The 3 months correlation between PNC and Coastal is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding PNC Financial Services and Coastal Carolina Bancshares in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Coastal Carolina Ban 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 Coastal Carolina. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Coastal Carolina Ban has no effect on the direction of PNC Financial i.e., PNC Financial and Coastal Carolina go up and down completely randomly.

Pair Corralation between PNC Financial and Coastal Carolina

Considering the 90-day investment horizon PNC Financial Services is expected to generate 2.52 times more return on investment than Coastal Carolina. However, PNC Financial is 2.52 times more volatile than Coastal Carolina Bancshares. It trades about 0.14 of its potential returns per unit of risk. Coastal Carolina Bancshares is currently generating about 0.1 per unit of risk. If you would invest  19,154  in PNC Financial Services on October 22, 2024 and sell it today you would earn a total of  700.00  from holding PNC Financial Services or generate 3.65% return on investment over 90 days.

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

PNC Financial Services  vs.  Coastal Carolina Bancshares

PNC Financial Services

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in PNC Financial Services are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady basic indicators, PNC Financial may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Coastal Carolina Ban

Risk-Adjusted Performance

9 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Coastal Carolina Bancshares are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain basic indicators, Coastal Carolina may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with PNC Financial and Coastal Carolina

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

The idea behind PNC Financial Services and Coastal Carolina Bancshares 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.