Correlation Between 1st Colonial and Pinnacle Bank
Can any of the company-specific risk be diversified away by investing in both 1st Colonial 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 1st Colonial and Pinnacle Bank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between 1st Colonial Bancorp and Pinnacle Bank, you can compare the effects of market volatilities on 1st Colonial 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 1st Colonial with a short position of Pinnacle Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of 1st Colonial and Pinnacle Bank.
Diversification Opportunities for 1st Colonial and Pinnacle Bank
-0.7 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between 1st and Pinnacle is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding 1st Colonial Bancorp and Pinnacle Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pinnacle Bank and 1st Colonial 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 1st Colonial Bancorp 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 1st Colonial i.e., 1st Colonial and Pinnacle Bank go up and down completely randomly.
Pair Corralation between 1st Colonial and Pinnacle Bank
Given the investment horizon of 90 days 1st Colonial Bancorp is expected to under-perform the Pinnacle Bank. In addition to that, 1st Colonial is 1.31 times more volatile than Pinnacle Bank. It trades about -0.1 of its total potential returns per unit of risk. Pinnacle Bank is currently generating about 0.1 per unit of volatility. If you would invest 1,850 in Pinnacle Bank on August 29, 2024 and sell it today you would earn a total of 90.00 from holding Pinnacle Bank or generate 4.86% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 98.44% |
| Values | Daily Returns |
1st Colonial Bancorp vs. Pinnacle Bank
Performance |
| Timeline |
| 1st Colonial Bancorp |
| Pinnacle Bank |
1st Colonial and Pinnacle Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with 1st Colonial and Pinnacle Bank
The main advantage of trading using opposite 1st Colonial and Pinnacle Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if 1st Colonial 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.| 1st Colonial vs. CCSB Financial Corp | 1st Colonial vs. Bank of Utica | 1st Colonial vs. First Community Financial | 1st Colonial vs. BEO Bancorp |
| 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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