Correlation Between PNC Financial and TRI CHEMICAL

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

Diversification Opportunities for PNC Financial and TRI CHEMICAL

-0.66

Correlation Coefficient

PNC Financial  TRI CHEMICAL

Excellent diversification

The 3 months correlation between PNC and TRI is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding The PNC Financial and TRI CHEMICAL LABORATINC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TRI CHEMICAL LABORATINC 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 TRI CHEMICAL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TRI CHEMICAL LABORATINC has no effect on the direction of PNC Financial i.e., PNC Financial and TRI CHEMICAL go up and down completely randomly.

Pair Corralation between PNC Financial and TRI CHEMICAL

Assuming the 90 days horizon PNC Financial is expected to generate 1.25 times less return on investment than TRI CHEMICAL. But when comparing it to its historical volatility, The PNC Financial is 1.8 times less risky than TRI CHEMICAL. It trades about 0.05 of its potential returns per unit of risk. TRI CHEMICAL LABORATINC is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  1,564  in TRI CHEMICAL LABORATINC on October 14, 2024 and sell it today you would earn a total of  496.00  from holding TRI CHEMICAL LABORATINC or generate 31.71% return on investment over 90 days.

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

The PNC Financial  vs.  TRI CHEMICAL LABORATINC

PNC Financial

Risk-Adjusted Performance

6 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in The PNC Financial are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady basic indicators, PNC Financial may actually be approaching a critical reversion point that can send shares even higher in February 2025.

TRI CHEMICAL LABORATINC

Risk-Adjusted Performance

3 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in TRI CHEMICAL LABORATINC are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, TRI CHEMICAL may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with PNC Financial and TRI CHEMICAL

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

The idea behind The PNC Financial and TRI CHEMICAL LABORATINC 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.