Correlation Between Pnc International and Pnc Emerging

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

Diversification Opportunities for Pnc International and Pnc Emerging

0.47

Correlation Coefficient

Pnc International  Pnc Emerging

Very weak diversification

The 3 months correlation between Pnc and Pnc is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Pnc International Equity and Pnc Emerging Markets in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pnc Emerging Markets 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 Pnc Emerging. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pnc Emerging Markets has no effect on the direction of Pnc International i.e., Pnc International and Pnc Emerging go up and down completely randomly.

Pair Corralation between Pnc International and Pnc Emerging

Assuming the 90 days horizon Pnc International is expected to generate 1.34 times less return on investment than Pnc Emerging. But when comparing it to its historical volatility, Pnc International Equity is 1.38 times less risky than Pnc Emerging. It trades about 0.26 of its potential returns per unit of risk. Pnc Emerging Markets is currently generating about 0.25 of returns per unit of risk over similar time horizon. If you would invest  1,608  in Pnc Emerging Markets on April 30, 2025 and sell it today you would earn a total of  221.00  from holding Pnc Emerging Markets or generate 13.74% return on investment over 90 days.

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

Pnc International Equity  vs.  Pnc Emerging Markets

Pnc International Equity

Risk-Adjusted Performance

Solid

Over the last 90 days Pnc International Equity has generated negative risk-adjusted returns adding no value to fund investors. 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.

Pnc Emerging Markets

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Pnc Emerging Markets are ranked lower than 19 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak technical and fundamental indicators, Pnc Emerging showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Pnc International and Pnc Emerging

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

The idea behind Pnc International Equity and Pnc Emerging Markets 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.