Correlation Between PNC Financial and Grupo Financiero

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

Diversification Opportunities for PNC Financial and Grupo Financiero

-0.26

Correlation Coefficient

PNC Financial  Grupo Financiero

Very good diversification

The 3 months correlation between PNC and Grupo is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding PNC Financial Services and Grupo Financiero Inbursa in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Grupo Financiero Inbursa 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 Grupo Financiero. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Grupo Financiero Inbursa has no effect on the direction of PNC Financial i.e., PNC Financial and Grupo Financiero go up and down completely randomly.

Pair Corralation between PNC Financial and Grupo Financiero

Considering the 90-day investment horizon PNC Financial Services is expected to under-perform the Grupo Financiero. But the stock apears to be less risky and, when comparing its historical volatility, PNC Financial Services is 2.03 times less risky than Grupo Financiero. The stock trades about -0.09 of its potential returns per unit of risk. The Grupo Financiero Inbursa is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  235.00  in Grupo Financiero Inbursa on December 27, 2024 and sell it today you would lose (6.00) from holding Grupo Financiero Inbursa or give up 2.55% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	96.77%
Values	Daily Returns

PNC Financial Services  vs.  Grupo Financiero Inbursa

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.

Grupo Financiero Inbursa

Risk-Adjusted Performance

Very Weak

Over the last 90 days Grupo Financiero Inbursa has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Grupo Financiero is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with PNC Financial and Grupo Financiero

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

The idea behind PNC Financial Services and Grupo Financiero Inbursa 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.