Correlation Between PNC Financial and LOral SA

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

Diversification Opportunities for PNC Financial and LOral SA

-0.4

Correlation Coefficient

PNC Financial  LOral SA

Very good diversification

The 3 months correlation between PNC and LOral is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding PNC Financial Services and LOral SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LOral SA 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 LOral SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LOral SA has no effect on the direction of PNC Financial i.e., PNC Financial and LOral SA go up and down completely randomly.

Pair Corralation between PNC Financial and LOral SA

Assuming the 90 days trading horizon PNC Financial Services is expected to under-perform the LOral SA. In addition to that, PNC Financial is 1.11 times more volatile than LOral SA. It trades about -0.13 of its total potential returns per unit of risk. LOral SA is currently generating about 0.09 per unit of volatility. If you would invest  33,770  in LOral SA on December 20, 2024 and sell it today you would earn a total of  2,595  from holding LOral SA or generate 7.68% return on investment over 90 days.

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

PNC Financial Services  vs.  LOral SA

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 fragile performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

LOral SA

Risk-Adjusted Performance

OK

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

Pair Trading with PNC Financial and LOral SA

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

The idea behind PNC Financial Services and LOral SA 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.

Check out your portfolio center.

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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.