Correlation Between Pinnacle Bancshares and Eastern Michigan
Can any of the company-specific risk be diversified away by investing in both Pinnacle Bancshares and Eastern Michigan 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 Pinnacle Bancshares and Eastern Michigan into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Pinnacle Bancshares and Eastern Michigan Financial, you can compare the effects of market volatilities on Pinnacle Bancshares and Eastern Michigan 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 Pinnacle Bancshares with a short position of Eastern Michigan. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pinnacle Bancshares and Eastern Michigan.
Diversification Opportunities for Pinnacle Bancshares and Eastern Michigan
0.35 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Pinnacle and Eastern is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Pinnacle Bancshares and Eastern Michigan Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eastern Michigan Fin and Pinnacle Bancshares 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 Pinnacle Bancshares are associated (or correlated) with Eastern Michigan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eastern Michigan Fin has no effect on the direction of Pinnacle Bancshares i.e., Pinnacle Bancshares and Eastern Michigan go up and down completely randomly.
Pair Corralation between Pinnacle Bancshares and Eastern Michigan
Given the investment horizon of 90 days Pinnacle Bancshares is expected to under-perform the Eastern Michigan. But the pink sheet apears to be less risky and, when comparing its historical volatility, Pinnacle Bancshares is 3.44 times less risky than Eastern Michigan. The pink sheet trades about -0.31 of its potential returns per unit of risk. The Eastern Michigan Financial is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 2,650 in Eastern Michigan Financial on October 21, 2024 and sell it today you would earn a total of 1,050 from holding Eastern Michigan Financial or generate 39.62% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 1.84% |
| Values | Daily Returns |
Pinnacle Bancshares vs. Eastern Michigan Financial
Performance |
| Timeline |
| Pinnacle Bancshares |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Eastern Michigan Fin |
Pinnacle Bancshares and Eastern Michigan Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pinnacle Bancshares and Eastern Michigan
The main advantage of trading using opposite Pinnacle Bancshares and Eastern Michigan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pinnacle Bancshares position performs unexpectedly, Eastern Michigan 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 Eastern Michigan will offset losses from the drop in Eastern Michigan's long position.| Pinnacle Bancshares vs. Eastern Michigan Financial | Pinnacle Bancshares vs. Commercial National Financial | Pinnacle Bancshares vs. Mifflinburg Bancorp | Pinnacle Bancshares vs. Apollo Bancorp |
| Eastern Michigan vs. Commercial National Financial | Eastern Michigan vs. Mifflinburg Bancorp | Eastern Michigan vs. Apollo Bancorp | Eastern Michigan vs. Community Bankers |
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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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