Correlation Between WT OFFSHORE and PNC Financial

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

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

Diversification Opportunities for WT OFFSHORE and PNC Financial

-0.48

Correlation Coefficient

WT OFFSHORE  PNC Financial

Very good diversification

The 3 months correlation between UWV and PNC is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding WT OFFSHORE and The PNC Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PNC Financial and WT OFFSHORE 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 WT OFFSHORE 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 has no effect on the direction of WT OFFSHORE i.e., WT OFFSHORE and PNC Financial go up and down completely randomly.

Pair Corralation between WT OFFSHORE and PNC Financial

Assuming the 90 days trading horizon WT OFFSHORE is expected to under-perform the PNC Financial. In addition to that, WT OFFSHORE is 1.93 times more volatile than The PNC Financial. It trades about -0.47 of its total potential returns per unit of risk. The PNC Financial is currently generating about -0.1 per unit of volatility. If you would invest  19,200  in The PNC Financial on September 21, 2024 and sell it today you would lose (700.00) from holding The PNC Financial or give up 3.65% of portfolio value over 90 days.

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

WT OFFSHORE  vs.  The PNC Financial

WT OFFSHORE

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days WT OFFSHORE 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 January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

PNC Financial

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in The PNC Financial are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, PNC Financial may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with WT OFFSHORE and PNC Financial

The main advantage of trading using opposite WT OFFSHORE and PNC Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if WT OFFSHORE 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 WT OFFSHORE and The PNC Financial 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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.