Correlation Between UmweltBank and PNC Financial

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

By analyzing existing cross correlation between UmweltBank AG and PNC Financial Services, you can compare the effects of market volatilities on UmweltBank and PNC 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 UmweltBank with a short position of PNC Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of UmweltBank and PNC Financial.

Diversification Opportunities for UmweltBank and PNC Financial

0.8

Correlation Coefficient

UmweltBank  PNC Financial

Very poor diversification

The 3 months correlation between UmweltBank and PNC is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding UmweltBank AG and PNC Financial Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PNC Financial Services and UmweltBank 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 UmweltBank AG are associated (or correlated) with PNC Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PNC Financial Services has no effect on the direction of UmweltBank i.e., UmweltBank and PNC Financial go up and down completely randomly.

Pair Corralation between UmweltBank and PNC Financial

Assuming the 90 days trading horizon UmweltBank AG is expected to under-perform the PNC Financial. In addition to that, UmweltBank is 1.08 times more volatile than PNC Financial Services. It trades about -0.16 of its total potential returns per unit of risk. PNC Financial Services is currently generating about -0.13 per unit of volatility. If you would invest  18,244  in PNC Financial Services on December 22, 2024 and sell it today you would lose (2,444) from holding PNC Financial Services or give up 13.4% of portfolio value over 90 days.

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

UmweltBank AG  vs.  PNC Financial Services

UmweltBank AG

Risk-Adjusted Performance

Very Weak

Over the last 90 days UmweltBank AG 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.

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 uncertain 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.

Pair Trading with UmweltBank and PNC Financial

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

The idea behind UmweltBank AG and PNC Financial Services 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 CEOs Directory module to screen CEOs from public companies around the world.