Correlation Between Pinnacle West and Poxel SA
Can any of the company-specific risk be diversified away by investing in both Pinnacle West and Poxel SA 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 Pinnacle West and Poxel SA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Pinnacle West Capital and Poxel SA, you can compare the effects of market volatilities on Pinnacle West and Poxel SA 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 Pinnacle West with a short position of Poxel SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pinnacle West and Poxel SA.
Diversification Opportunities for Pinnacle West and Poxel SA
-0.38 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Pinnacle and Poxel is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding Pinnacle West Capital and Poxel SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Poxel SA and Pinnacle West 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 Pinnacle West Capital are associated (or correlated) with Poxel SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Poxel SA has no effect on the direction of Pinnacle West i.e., Pinnacle West and Poxel SA go up and down completely randomly.
Pair Corralation between Pinnacle West and Poxel SA
Assuming the 90 days trading horizon Pinnacle West Capital is expected to generate 0.46 times more return on investment than Poxel SA. However, Pinnacle West Capital is 2.15 times less risky than Poxel SA. It trades about 0.21 of its potential returns per unit of risk. Poxel SA is currently generating about -0.44 per unit of risk. If you would invest 8,730 in Pinnacle West Capital on September 1, 2024 and sell it today you would earn a total of 673.00 from holding Pinnacle West Capital or generate 7.71% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Pinnacle West Capital vs. Poxel SA
Performance |
| Timeline |
| Pinnacle West Capital |
| Poxel SA |
Pinnacle West and Poxel SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pinnacle West and Poxel SA
The main advantage of trading using opposite Pinnacle West and Poxel SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pinnacle West position performs unexpectedly, Poxel SA 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 Poxel SA will offset losses from the drop in Poxel SA's long position.| Pinnacle West vs. Uniper SE | Pinnacle West vs. Mulberry Group PLC | Pinnacle West vs. London Security Plc | Pinnacle West vs. Triad Group PLC |
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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 the Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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