Correlation Between American Express and Pinnacle Bank
Can any of the company-specific risk be diversified away by investing in both American Express 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 Express 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 Express and Pinnacle Bank, you can compare the effects of market volatilities on American Express 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 Express with a short position of Pinnacle Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Express and Pinnacle Bank.
Diversification Opportunities for American Express and Pinnacle Bank
-0.58 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between American and Pinnacle is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding American Express and Pinnacle Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pinnacle Bank and American Express 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 Express 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 Express i.e., American Express and Pinnacle Bank go up and down completely randomly.
Pair Corralation between American Express and Pinnacle Bank
Considering the 90-day investment horizon American Express is expected to generate 1.13 times more return on investment than Pinnacle Bank. However, American Express is 1.13 times more volatile than Pinnacle Bank. It trades about 0.09 of its potential returns per unit of risk. Pinnacle Bank is currently generating about 0.05 per unit of risk. If you would invest 17,677 in American Express on November 2, 2024 and sell it today you would earn a total of 14,068 from holding American Express or generate 79.58% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
American Express vs. Pinnacle Bank
Performance |
| Timeline |
| American Express |
| Pinnacle Bank |
American Express and Pinnacle Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Express and Pinnacle Bank
The main advantage of trading using opposite American Express and Pinnacle Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Express 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 Express vs. Visa Class A | American Express vs. PayPal Holdings | American Express vs. Capital One Financial | American Express vs. Upstart Holdings |
| 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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