Correlation Between PSB Holdings and Pinnacle Bank
Can any of the company-specific risk be diversified away by investing in both PSB Holdings 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 PSB Holdings and Pinnacle Bank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PSB Holdings and Pinnacle Bank, you can compare the effects of market volatilities on PSB Holdings 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 PSB Holdings with a short position of Pinnacle Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of PSB Holdings and Pinnacle Bank.
Diversification Opportunities for PSB Holdings and Pinnacle Bank
0.36 | Correlation Coefficient |
Weak diversification
The 3 months correlation between PSB and Pinnacle is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding PSB Holdings and Pinnacle Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pinnacle Bank and PSB Holdings 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 PSB Holdings 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 PSB Holdings i.e., PSB Holdings and Pinnacle Bank go up and down completely randomly.
Pair Corralation between PSB Holdings and Pinnacle Bank
Given the investment horizon of 90 days PSB Holdings is expected to generate 1.18 times more return on investment than Pinnacle Bank. However, PSB Holdings is 1.18 times more volatile than Pinnacle Bank. It trades about 0.21 of its potential returns per unit of risk. Pinnacle Bank is currently generating about 0.1 per unit of risk. If you would invest 2,480 in PSB Holdings on August 29, 2024 and sell it today you would earn a total of 310.00 from holding PSB Holdings or generate 12.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 98.44% |
| Values | Daily Returns |
PSB Holdings vs. Pinnacle Bank
Performance |
| Timeline |
| PSB Holdings |
| Pinnacle Bank |
PSB Holdings and Pinnacle Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PSB Holdings and Pinnacle Bank
The main advantage of trading using opposite PSB Holdings and Pinnacle Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PSB Holdings 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.| PSB Holdings vs. Eagle Financial Services | PSB Holdings vs. National Capital Bank | PSB Holdings vs. Community Heritage Financial | PSB Holdings vs. Citizens Financial Corp |
| 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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