Correlation Between Charles Schwab and PNC Bank

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

Diversification Opportunities for Charles Schwab and PNC Bank

  Correlation Coefficient

Almost no diversification

The 3 months correlation between Charles and PNC Bank is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding The Charles Schwab and PNC Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PNC Bank and Charles Schwab 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 The Charles Schwab 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 Charles Schwab i.e., Charles Schwab and PNC Bank go up and down completely randomly.

Pair Corralation between Charles Schwab and PNC Bank

Given the investment horizon of 90 days The Charles Schwab is expected to generate 1.47 times more return on investment than PNC Bank. However, Charles Schwab is 1.47 times more volatile than PNC Bank. It trades about 0.23 of its potential returns per unit of risk. PNC Bank is currently generating about 0.19 per unit of risk. If you would invest  6,218  in The Charles Schwab on May 21, 2022 and sell it today you would earn a total of  1,357  from holding The Charles Schwab or generate 21.82% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Strong
ValuesDaily Returns

The Charles Schwab  vs.  PNC Bank

 Performance (%) 
Charles Schwab 
Charles Performance
9 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in The Charles Schwab are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating technical indicators, Charles Schwab showed solid returns over the last few months and may actually be approaching a breakup point.

Charles Price Channel

PNC Bank 
PNC Bank Performance
6 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in PNC Bank are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unfluctuating basic indicators, PNC Bank may actually be approaching a critical reversion point that can send shares even higher in September 2022.

PNC Bank Price Channel

Charles Schwab and PNC Bank Volatility Contrast

   Predicted Return Density   

Pair Trading with Charles Schwab and PNC Bank

The main advantage of trading using opposite Charles Schwab and PNC Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Charles Schwab 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 The Charles Schwab 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.

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