Correlation Between Eastern Michigan and Pinnacle Bancshares
Can any of the company-specific risk be diversified away by investing in both Eastern Michigan and Pinnacle Bancshares 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 Eastern Michigan and Pinnacle Bancshares into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Eastern Michigan Financial and Pinnacle Bancshares, you can compare the effects of market volatilities on Eastern Michigan and Pinnacle Bancshares 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 Eastern Michigan with a short position of Pinnacle Bancshares. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eastern Michigan and Pinnacle Bancshares.
Diversification Opportunities for Eastern Michigan and Pinnacle Bancshares
0.22 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Eastern and Pinnacle is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Eastern Michigan Financial and Pinnacle Bancshares in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pinnacle Bancshares and Eastern Michigan 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 Eastern Michigan Financial are associated (or correlated) with Pinnacle Bancshares. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pinnacle Bancshares has no effect on the direction of Eastern Michigan i.e., Eastern Michigan and Pinnacle Bancshares go up and down completely randomly.
Pair Corralation between Eastern Michigan and Pinnacle Bancshares
If you would invest 2,825 in Eastern Michigan Financial on August 29, 2024 and sell it today you would earn a total of 716.00 from holding Eastern Michigan Financial or generate 25.35% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 0.81% |
| Values | Daily Returns |
Eastern Michigan Financial vs. Pinnacle Bancshares
Performance |
| Timeline |
| Eastern Michigan Fin |
| Pinnacle Bancshares |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Eastern Michigan and Pinnacle Bancshares Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Eastern Michigan and Pinnacle Bancshares
The main advantage of trading using opposite Eastern Michigan and Pinnacle Bancshares positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eastern Michigan position performs unexpectedly, Pinnacle Bancshares 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 Bancshares will offset losses from the drop in Pinnacle Bancshares' long position.| Eastern Michigan vs. Commercial National Financial | Eastern Michigan vs. Mifflinburg Bancorp | Eastern Michigan vs. Apollo Bancorp | Eastern Michigan vs. Community Bankers |
| Pinnacle Bancshares vs. Eastern Michigan Financial | Pinnacle Bancshares vs. Commercial National Financial | Pinnacle Bancshares vs. Mifflinburg Bancorp | Pinnacle Bancshares vs. Apollo Bancorp |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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