Correlation Between Pnc International and Federated Mid-cap

Can any of the company-specific risk be diversified away by investing in both Pnc International and Federated Mid-cap 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 International and Federated Mid-cap into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Pnc International Equity and Federated Mid Cap Index, you can compare the effects of market volatilities on Pnc International and Federated Mid-cap 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 International with a short position of Federated Mid-cap. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pnc International and Federated Mid-cap.

Diversification Opportunities for Pnc International and Federated Mid-cap

0.93

Correlation Coefficient

Pnc International  Federated Mid-cap

Almost no diversification

The 3 months correlation between Pnc and Federated is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Pnc International Equity and Federated Mid Cap Index in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Federated Mid Cap and Pnc International 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 International Equity are associated (or correlated) with Federated Mid-cap. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Federated Mid Cap has no effect on the direction of Pnc International i.e., Pnc International and Federated Mid-cap go up and down completely randomly.

Pair Corralation between Pnc International and Federated Mid-cap

Assuming the 90 days horizon Pnc International is expected to generate 1.21 times less return on investment than Federated Mid-cap. But when comparing it to its historical volatility, Pnc International Equity is 1.65 times less risky than Federated Mid-cap. It trades about 0.28 of its potential returns per unit of risk. Federated Mid Cap Index is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest  1,405  in Federated Mid Cap Index on April 24, 2025 and sell it today you would earn a total of  177.00  from holding Federated Mid Cap Index or generate 12.6% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	98.39%
Values	Daily Returns

Pnc International Equity  vs.  Federated Mid Cap Index

Pnc International Equity

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Pnc International Equity are ranked lower than 21 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak forward indicators, Pnc International may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Federated Mid Cap

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Federated Mid Cap Index are ranked lower than 15 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak fundamental indicators, Federated Mid-cap may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Pair Trading with Pnc International and Federated Mid-cap

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

The idea behind Pnc International Equity and Federated Mid Cap Index 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.