Correlation Between PM Capital and Pinnacle Investment
Can any of the company-specific risk be diversified away by investing in both PM Capital 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 PM Capital and Pinnacle Investment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PM Capital Global and Pinnacle Investment Management, you can compare the effects of market volatilities on PM Capital 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 PM Capital with a short position of Pinnacle Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of PM Capital and Pinnacle Investment.
Diversification Opportunities for PM Capital and Pinnacle Investment
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between PGF and Pinnacle is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding PM Capital Global and Pinnacle Investment Management in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pinnacle Investment and PM Capital 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 PM Capital Global 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 PM Capital i.e., PM Capital and Pinnacle Investment go up and down completely randomly.
Pair Corralation between PM Capital and Pinnacle Investment
Assuming the 90 days trading horizon PM Capital Global is expected to under-perform the Pinnacle Investment. But the stock apears to be less risky and, when comparing its historical volatility, PM Capital Global is 1.22 times less risky than Pinnacle Investment. The stock trades about -0.07 of its potential returns per unit of risk. The Pinnacle Investment Management is currently generating about 0.55 of returns per unit of risk over similar time horizon. If you would invest 1,948 in Pinnacle Investment Management on August 27, 2024 and sell it today you would earn a total of 382.00 from holding Pinnacle Investment Management or generate 19.61% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
PM Capital Global vs. Pinnacle Investment Management
Performance |
| Timeline |
| PM Capital Global |
| Pinnacle Investment |
PM Capital and Pinnacle Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PM Capital and Pinnacle Investment
The main advantage of trading using opposite PM Capital and Pinnacle Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PM Capital 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.| PM Capital vs. National Australia Bank | PM Capital vs. National Australia Bank | PM Capital vs. Westpac Banking | PM Capital vs. National Australia Bank |
| Pinnacle Investment vs. Hutchison Telecommunications | Pinnacle Investment vs. Eagle Mountain Mining | Pinnacle Investment vs. Sky Metals | Pinnacle Investment vs. Platinum Asia Investments |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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