Correlation Between PNC Financial and Citizens Financial

Can any of the company-specific risk be diversified away by investing in both PNC Financial and Citizens Financial 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 Citizens Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between The PNC Financial and Citizens Financial Group, you can compare the effects of market volatilities on PNC Financial and Citizens Financial 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 Citizens Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of PNC Financial and Citizens Financial.

Diversification Opportunities for PNC Financial and Citizens Financial

0.99

Correlation Coefficient

PNC Financial  Citizens Financial

No risk reduction

The 3 months correlation between PNC and Citizens is 0.99. Overlapping area represents the amount of risk that can be diversified away by holding The PNC Financial and Citizens Financial Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Citizens Financial 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 The PNC Financial are associated (or correlated) with Citizens Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Citizens Financial has no effect on the direction of PNC Financial i.e., PNC Financial and Citizens Financial go up and down completely randomly.

Pair Corralation between PNC Financial and Citizens Financial

Assuming the 90 days horizon The PNC Financial is expected to generate 0.79 times more return on investment than Citizens Financial. However, The PNC Financial is 1.27 times less risky than Citizens Financial. It trades about 0.05 of its potential returns per unit of risk. Citizens Financial Group is currently generating about 0.03 per unit of risk. If you would invest  13,391  in The PNC Financial on September 20, 2024 and sell it today you would earn a total of  5,109  from holding The PNC Financial or generate 38.15% return on investment over 90 days.

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

The PNC Financial  vs.  Citizens Financial Group

PNC Financial

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in The PNC Financial are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady basic indicators, PNC Financial reported solid returns over the last few months and may actually be approaching a breakup point.

Citizens Financial

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Citizens Financial Group are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, Citizens Financial reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with PNC Financial and Citizens Financial

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

The idea behind The PNC Financial and Citizens Financial Group 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.