Correlation Between Pacific Financial and Pinnacle Bank
Can any of the company-specific risk be diversified away by investing in both Pacific Financial 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 Pacific Financial and Pinnacle Bank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Pacific Financial Corp and Pinnacle Bank, you can compare the effects of market volatilities on Pacific Financial 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 Pacific Financial with a short position of Pinnacle Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pacific Financial and Pinnacle Bank.
Diversification Opportunities for Pacific Financial and Pinnacle Bank
-0.46 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Pacific and Pinnacle is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding Pacific Financial Corp and Pinnacle Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pinnacle Bank and Pacific Financial 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 Pacific Financial Corp 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 Pacific Financial i.e., Pacific Financial and Pinnacle Bank go up and down completely randomly.
Pair Corralation between Pacific Financial and Pinnacle Bank
Given the investment horizon of 90 days Pacific Financial is expected to generate 1.37 times less return on investment than Pinnacle Bank. In addition to that, Pacific Financial is 2.32 times more volatile than Pinnacle Bank. It trades about 0.02 of its total potential returns per unit of risk. Pinnacle Bank is currently generating about 0.05 per unit of volatility. If you would invest 1,405 in Pinnacle Bank on November 2, 2024 and sell it today you would earn a total of 525.00 from holding Pinnacle Bank or generate 37.37% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 87.65% |
| Values | Daily Returns |
Pacific Financial Corp vs. Pinnacle Bank
Performance |
| Timeline |
| Pacific Financial Corp |
| Pinnacle Bank |
Pacific Financial and Pinnacle Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pacific Financial and Pinnacle Bank
The main advantage of trading using opposite Pacific Financial and Pinnacle Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pacific Financial 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.| Pacific Financial vs. Pioneer Bankcorp | Pacific Financial vs. Liberty Northwest Bancorp | Pacific Financial vs. First Community | Pacific Financial vs. Coeur dAlene 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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