Correlation Between Annaly Capital and PNC Bank

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Can any of the company-specific risk be diversified away by investing in both Annaly Capital and PNC Bank 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 Annaly Capital and PNC Bank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Annaly Capital Management and PNC Bank, you can compare the effects of market volatilities on Annaly Capital and PNC Bank 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 Annaly Capital with a short position of PNC Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Annaly Capital and PNC Bank.

Diversification Opportunities for Annaly Capital and PNC Bank

0.81
  Correlation Coefficient

Very poor diversification

The 3 months correlation between Annaly and PNC Bank is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Annaly Capital Management and PNC Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PNC Bank and Annaly Capital 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 Annaly Capital Management are associated (or correlated) with PNC Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PNC Bank has no effect on the direction of Annaly Capital i.e., Annaly Capital and PNC Bank go up and down completely randomly.

Pair Corralation between Annaly Capital and PNC Bank

Considering the 90-day investment horizon Annaly Capital Management is expected to generate 1.39 times more return on investment than PNC Bank. However, Annaly Capital is 1.39 times more volatile than PNC Bank. It trades about 0.0 of its potential returns per unit of risk. PNC Bank is currently generating about -0.06 per unit of risk. If you would invest  638.00  in Annaly Capital Management on March 26, 2022 and sell it today you would lose (5.00)  from holding Annaly Capital Management or give up 0.78% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthStrong
Accuracy100.0%
ValuesDaily Returns

Annaly Capital Management  vs.  PNC Bank

 Performance (%) 
      Timeline 
Annaly Capital Management 
Annaly Performance
0 of 100
Over the last 90 days Annaly Capital Management has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Stock's essential indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Structure and Payout Changes

Forward Annual Dividend Yield
0.15
Payout Ratio
0.77
Forward Annual Dividend Rate
0.88
Dividend Date
2022-07-29
Ex Dividend Date
2022-06-29

Annaly Price Channel

PNC Bank 
PNC Bank Performance
0 of 100
Over the last 90 days PNC Bank has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unfluctuating performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in July 2022. The current disturbance may also be a sign of long term up-swing for the company investors.

Structure and Payout Changes

Forward Annual Dividend Yield
0.0383
Payout Ratio
0.43
Last Split Factor
2:1
Forward Annual Dividend Rate
6.0
Dividend Date
2022-05-05
Ex Dividend Date
2022-04-12
Last Split Date
1992-11-16

PNC Bank Price Channel

Annaly Capital and PNC Bank Volatility Contrast

 Predicted Return Density 
      Returns 

Pair Trading with Annaly Capital and PNC Bank

The main advantage of trading using opposite Annaly Capital and PNC Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Annaly Capital position performs unexpectedly, PNC Bank 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 Bank will offset losses from the drop in PNC Bank's long position.
The idea behind Annaly Capital Management and PNC Bank 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.
Check out your portfolio center. 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.

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