Correlation Between PNC Financial and Generations Bancorp

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

Diversification Opportunities for PNC Financial and Generations Bancorp

0.27

Correlation Coefficient

PNC Financial  Generations Bancorp

Modest diversification

The 3 months correlation between PNC and Generations is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding PNC Financial Services and Generations Bancorp NY in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Generations Bancorp 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 Generations Bancorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Generations Bancorp has no effect on the direction of PNC Financial i.e., PNC Financial and Generations Bancorp go up and down completely randomly.

Pair Corralation between PNC Financial and Generations Bancorp

Considering the 90-day investment horizon PNC Financial is expected to generate 2.01 times less return on investment than Generations Bancorp. But when comparing it to its historical volatility, PNC Financial Services is 1.97 times less risky than Generations Bancorp. It trades about 0.04 of its potential returns per unit of risk. Generations Bancorp NY is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  1,080  in Generations Bancorp NY on September 21, 2024 and sell it today you would earn a total of  464.00  from holding Generations Bancorp NY or generate 42.96% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	89.7%
Values	Daily Returns

PNC Financial Services  vs.  Generations Bancorp NY

PNC Financial Services

Risk-Adjusted Performance

3 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in PNC Financial Services are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, PNC Financial is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Generations Bancorp

Risk-Adjusted Performance

0 of 100

Solid

Over the last 90 days Generations Bancorp NY has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly abnormal basic indicators, Generations Bancorp showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with PNC Financial and Generations Bancorp

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

The idea behind PNC Financial Services and Generations Bancorp NY 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.