Correlation Between PNC Financial and Intesa Sanpaolo

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

Diversification Opportunities for PNC Financial and Intesa Sanpaolo

-0.71

Correlation Coefficient

PNC Financial  Intesa Sanpaolo

Pay attention - limited upside

The 3 months correlation between PNC and Intesa is -0.71. Overlapping area represents the amount of risk that can be diversified away by holding PNC Financial Services and Intesa Sanpaolo SpA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Intesa Sanpaolo SpA 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 Intesa Sanpaolo. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Intesa Sanpaolo SpA has no effect on the direction of PNC Financial i.e., PNC Financial and Intesa Sanpaolo go up and down completely randomly.

Pair Corralation between PNC Financial and Intesa Sanpaolo

Considering the 90-day investment horizon PNC Financial Services is expected to under-perform the Intesa Sanpaolo. But the stock apears to be less risky and, when comparing its historical volatility, PNC Financial Services is 1.09 times less risky than Intesa Sanpaolo. The stock trades about -0.09 of its potential returns per unit of risk. The Intesa Sanpaolo SpA is currently generating about 0.29 of returns per unit of risk over similar time horizon. If you would invest  2,428  in Intesa Sanpaolo SpA on December 26, 2024 and sell it today you would earn a total of  740.00  from holding Intesa Sanpaolo SpA or generate 30.48% return on investment over 90 days.

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

PNC Financial Services  vs.  Intesa Sanpaolo SpA

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.

Intesa Sanpaolo SpA

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Intesa Sanpaolo SpA are ranked lower than 22 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Intesa Sanpaolo showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with PNC Financial and Intesa Sanpaolo

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

The idea behind PNC Financial Services and Intesa Sanpaolo SpA 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.