Correlation Between National Australia and Pinnacle Investment
Can any of the company-specific risk be diversified away by investing in both National Australia and Pinnacle Investment 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 National Australia and Pinnacle Investment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between National Australia Bank and Pinnacle Investment Management, you can compare the effects of market volatilities on National Australia and Pinnacle Investment 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 National Australia with a short position of Pinnacle Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of National Australia and Pinnacle Investment.
Diversification Opportunities for National Australia and Pinnacle Investment
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between National and Pinnacle is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding National Australia Bank and Pinnacle Investment Management in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pinnacle Investment and National Australia 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 National Australia Bank are associated (or correlated) with Pinnacle Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pinnacle Investment has no effect on the direction of National Australia i.e., National Australia and Pinnacle Investment go up and down completely randomly.
Pair Corralation between National Australia and Pinnacle Investment
Assuming the 90 days trading horizon National Australia is expected to generate 83.24 times less return on investment than Pinnacle Investment. But when comparing it to its historical volatility, National Australia Bank is 6.73 times less risky than Pinnacle Investment. It trades about 0.05 of its potential returns per unit of risk. Pinnacle Investment Management is currently generating about 0.66 of returns per unit of risk over similar time horizon. If you would invest 1,948 in Pinnacle Investment Management on August 29, 2024 and sell it today you would earn a total of 492.00 from holding Pinnacle Investment Management or generate 25.26% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
National Australia Bank vs. Pinnacle Investment Management
Performance |
| Timeline |
| National Australia Bank |
| Pinnacle Investment |
National Australia and Pinnacle Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with National Australia and Pinnacle Investment
The main advantage of trading using opposite National Australia and Pinnacle Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if National Australia position performs unexpectedly, Pinnacle Investment 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 Investment will offset losses from the drop in Pinnacle Investment's long position.| National Australia vs. Westpac Banking | National Australia vs. Commonwealth Bank | National Australia vs. National Australia Bank | National Australia vs. Westpac Banking Corp |
| Pinnacle Investment vs. Skycity Entertainment Group | Pinnacle Investment vs. Gold Road Resources | Pinnacle Investment vs. Olivers Real Food | Pinnacle Investment vs. IDP Education |
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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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