Correlation Between American Business and Pinnacle Bank
Can any of the company-specific risk be diversified away by investing in both American Business and Pinnacle 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 American Business and Pinnacle Bank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Business Bk and Pinnacle Bank, you can compare the effects of market volatilities on American Business and Pinnacle 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 American Business with a short position of Pinnacle Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Business and Pinnacle Bank.
Diversification Opportunities for American Business and Pinnacle Bank
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between American and Pinnacle is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding American Business Bk and Pinnacle Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pinnacle Bank and American Business 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 American Business Bk are associated (or correlated) with Pinnacle Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pinnacle Bank has no effect on the direction of American Business i.e., American Business and Pinnacle Bank go up and down completely randomly.
Pair Corralation between American Business and Pinnacle Bank
Given the investment horizon of 90 days American Business Bk is expected to generate 1.02 times more return on investment than Pinnacle Bank. However, American Business is 1.02 times more volatile than Pinnacle Bank. It trades about 0.42 of its potential returns per unit of risk. Pinnacle Bank is currently generating about 0.02 per unit of risk. If you would invest 3,794 in American Business Bk on August 30, 2024 and sell it today you would earn a total of 656.00 from holding American Business Bk or generate 17.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 97.73% |
| Values | Daily Returns |
American Business Bk vs. Pinnacle Bank
Performance |
| Timeline |
| American Business |
| Pinnacle Bank |
American Business and Pinnacle Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Business and Pinnacle Bank
The main advantage of trading using opposite American Business and Pinnacle Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Business position performs unexpectedly, Pinnacle 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 Pinnacle Bank will offset losses from the drop in Pinnacle Bank's long position.| American Business vs. Invesco High Income | American Business vs. Blackrock Muniholdings Ny | American Business vs. Nuveen California Select | American Business vs. MFS Investment Grade |
| Pinnacle Bank vs. Truist Financial Corp | Pinnacle Bank vs. PNC Financial Services | Pinnacle Bank vs. KeyCorp | Pinnacle Bank vs. Western Alliance Bancorporation |
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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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