Correlation Between Pinnacle Investment and Aristocrat Leisure
Can any of the company-specific risk be diversified away by investing in both Pinnacle Investment and Aristocrat Leisure 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 Investment and Aristocrat Leisure into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Pinnacle Investment Management and Aristocrat Leisure, you can compare the effects of market volatilities on Pinnacle Investment and Aristocrat Leisure 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 Investment with a short position of Aristocrat Leisure. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pinnacle Investment and Aristocrat Leisure.
Diversification Opportunities for Pinnacle Investment and Aristocrat Leisure
0.94 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Pinnacle and Aristocrat is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Pinnacle Investment Management and Aristocrat Leisure in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aristocrat Leisure and Pinnacle Investment 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 Investment Management are associated (or correlated) with Aristocrat Leisure. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aristocrat Leisure has no effect on the direction of Pinnacle Investment i.e., Pinnacle Investment and Aristocrat Leisure go up and down completely randomly.
Pair Corralation between Pinnacle Investment and Aristocrat Leisure
Assuming the 90 days trading horizon Pinnacle Investment Management is expected to generate 1.82 times more return on investment than Aristocrat Leisure. However, Pinnacle Investment is 1.82 times more volatile than Aristocrat Leisure. It trades about 0.35 of its potential returns per unit of risk. Aristocrat Leisure is currently generating about 0.43 per unit of risk. If you would invest 2,013 in Pinnacle Investment Management on September 1, 2024 and sell it today you would earn a total of 331.00 from holding Pinnacle Investment Management or generate 16.44% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Pinnacle Investment Management vs. Aristocrat Leisure
Performance |
| Timeline |
| Pinnacle Investment |
| Aristocrat Leisure |
Pinnacle Investment and Aristocrat Leisure Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pinnacle Investment and Aristocrat Leisure
The main advantage of trading using opposite Pinnacle Investment and Aristocrat Leisure positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pinnacle Investment position performs unexpectedly, Aristocrat Leisure 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 Aristocrat Leisure will offset losses from the drop in Aristocrat Leisure's long position.| Pinnacle Investment vs. WA1 Resources | Pinnacle Investment vs. Predictive Discovery | Pinnacle Investment vs. Cooper Metals | Pinnacle Investment vs. OD6 Metals |
| Aristocrat Leisure vs. iShares Global Healthcare | Aristocrat Leisure vs. Australian Dairy Farms | Aristocrat Leisure vs. Adriatic Metals Plc | Aristocrat Leisure vs. Australian Agricultural |
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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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