Correlation Between PPL and Exchange Bankshares

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

By analyzing existing cross correlation between PPL Corporation and Exchange Bankshares, you can compare the effects of market volatilities on PPL and Exchange Bankshares 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 PPL with a short position of Exchange Bankshares. Check out your portfolio center. Please also check ongoing floating volatility patterns of PPL and Exchange Bankshares.

Diversification Opportunities for PPL and Exchange Bankshares

0.42

Correlation Coefficient

PPL  Exchange Bankshares

Very weak diversification

The 3 months correlation between PPL and Exchange is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding PPL Corp. and Exchange Bankshares in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Exchange Bankshares and PPL 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 PPL Corporation are associated (or correlated) with Exchange Bankshares. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Exchange Bankshares has no effect on the direction of PPL i.e., PPL and Exchange Bankshares go up and down completely randomly.

Pair Corralation between PPL and Exchange Bankshares

Considering the 90-day investment horizon PPL is expected to generate 2.11 times less return on investment than Exchange Bankshares. But when comparing it to its historical volatility, PPL Corporation is 1.15 times less risky than Exchange Bankshares. It trades about 0.09 of its potential returns per unit of risk. Exchange Bankshares is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest  4,762  in Exchange Bankshares on July 6, 2025 and sell it today you would earn a total of  1,069  from holding Exchange Bankshares or generate 22.45% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	88.0%
Values	Daily Returns

PPL Corp.  vs.  Exchange Bankshares

PPL Corporation

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in PPL Corporation are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite quite fragile basic indicators, PPL may actually be approaching a critical reversion point that can send shares even higher in November 2025.

Exchange Bankshares

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Exchange Bankshares are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite fairly weak fundamental indicators, Exchange Bankshares demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with PPL and Exchange Bankshares

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

The idea behind PPL Corporation and Exchange Bankshares 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 Prophet module to use AI to generate optimal portfolios and find profitable investment opportunities.