Correlation Between Pinnacle West and Abingdon Health
Can any of the company-specific risk be diversified away by investing in both Pinnacle West and Abingdon Health 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 Abingdon Health 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 Abingdon Health Plc, you can compare the effects of market volatilities on Pinnacle West and Abingdon Health 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 Abingdon Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pinnacle West and Abingdon Health.
Diversification Opportunities for Pinnacle West and Abingdon Health
-0.53 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Pinnacle and Abingdon is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding Pinnacle West Capital and Abingdon Health Plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Abingdon Health Plc 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 Abingdon Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Abingdon Health Plc has no effect on the direction of Pinnacle West i.e., Pinnacle West and Abingdon Health go up and down completely randomly.
Pair Corralation between Pinnacle West and Abingdon Health
Assuming the 90 days trading horizon Pinnacle West is expected to generate 3.47 times less return on investment than Abingdon Health. But when comparing it to its historical volatility, Pinnacle West Capital is 3.5 times less risky than Abingdon Health. It trades about 0.05 of its potential returns per unit of risk. Abingdon Health Plc is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 425.00 in Abingdon Health Plc on September 13, 2024 and sell it today you would earn a total of 325.00 from holding Abingdon Health Plc or generate 76.47% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 85.51% |
| Values | Daily Returns |
Pinnacle West Capital vs. Abingdon Health Plc
Performance |
| Timeline |
| Pinnacle West Capital |
| Abingdon Health Plc |
Pinnacle West and Abingdon Health Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pinnacle West and Abingdon Health
The main advantage of trading using opposite Pinnacle West and Abingdon Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pinnacle West position performs unexpectedly, Abingdon Health 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 Abingdon Health will offset losses from the drop in Abingdon Health's long position.| Pinnacle West vs. Samsung Electronics Co | Pinnacle West vs. Samsung Electronics Co | Pinnacle West vs. Hyundai Motor | Pinnacle West vs. Reliance Industries Ltd |
| Abingdon Health vs. SBM Offshore NV | Abingdon Health vs. Hochschild Mining plc | Abingdon Health vs. Indutrade AB | Abingdon Health vs. GreenX Metals |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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