Correlation Between PNC Financial and Deutsche Bank

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

Diversification Opportunities for PNC Financial and Deutsche Bank

-0.35

Correlation Coefficient

PNC Financial  Deutsche Bank

Very good diversification

The 3 months correlation between PNC and Deutsche is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding PNC Financial Services and Deutsche Bank AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Deutsche Bank AG 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 Deutsche Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Deutsche Bank AG has no effect on the direction of PNC Financial i.e., PNC Financial and Deutsche Bank go up and down completely randomly.

Pair Corralation between PNC Financial and Deutsche Bank

Considering the 90-day investment horizon PNC Financial Services is expected to under-perform the Deutsche Bank. But the stock apears to be less risky and, when comparing its historical volatility, PNC Financial Services is 1.31 times less risky than Deutsche Bank. The stock trades about -0.11 of its potential returns per unit of risk. The Deutsche Bank AG is currently generating about 0.23 of returns per unit of risk over similar time horizon. If you would invest  1,747  in Deutsche Bank AG on December 4, 2024 and sell it today you would earn a total of  411.00  from holding Deutsche Bank AG or generate 23.53% return on investment over 90 days.

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

PNC Financial Services  vs.  Deutsche Bank AG

PNC Financial Services

Risk-Adjusted Performance

Very Weak

Over the last 90 days PNC Financial Services 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 sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Deutsche Bank AG

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Deutsche Bank AG are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unsteady fundamental drivers, Deutsche Bank sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with PNC Financial and Deutsche Bank

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

The idea behind PNC Financial Services and Deutsche Bank AG 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.