Correlation Between Red River and Pinnacle Financial
Can any of the company-specific risk be diversified away by investing in both Red River and Pinnacle Financial 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 Red River and Pinnacle Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Red River Bancshares and Pinnacle Financial Partners, you can compare the effects of market volatilities on Red River and Pinnacle Financial 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 Red River with a short position of Pinnacle Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Red River and Pinnacle Financial.
Diversification Opportunities for Red River and Pinnacle Financial
0.96 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Red and Pinnacle is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding Red River Bancshares and Pinnacle Financial Partners in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pinnacle Financial and Red River 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 Red River Bancshares are associated (or correlated) with Pinnacle Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pinnacle Financial has no effect on the direction of Red River i.e., Red River and Pinnacle Financial go up and down completely randomly.
Pair Corralation between Red River and Pinnacle Financial
Given the investment horizon of 90 days Red River is expected to generate 1.41 times less return on investment than Pinnacle Financial. But when comparing it to its historical volatility, Red River Bancshares is 2.0 times less risky than Pinnacle Financial. It trades about 0.37 of its potential returns per unit of risk. Pinnacle Financial Partners is currently generating about 0.26 of returns per unit of risk over similar time horizon. If you would invest 10,523 in Pinnacle Financial Partners on September 1, 2024 and sell it today you would earn a total of 2,188 from holding Pinnacle Financial Partners or generate 20.79% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Red River Bancshares vs. Pinnacle Financial Partners
Performance |
| Timeline |
| Red River Bancshares |
| Pinnacle Financial |
Red River and Pinnacle Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Red River and Pinnacle Financial
The main advantage of trading using opposite Red River and Pinnacle Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Red River position performs unexpectedly, Pinnacle Financial 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 Financial will offset losses from the drop in Pinnacle Financial's long position.| Red River vs. Home Federal Bancorp | Red River vs. Magyar Bancorp | Red River vs. Community West Bancshares | Red River vs. Rhinebeck Bancorp |
| Pinnacle Financial vs. Wintrust Financial | Pinnacle Financial vs. Renasant | Pinnacle Financial vs. Texas Capital Bancshares | Pinnacle Financial vs. Home BancShares |
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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
Other Complementary Tools
| Portfolio Dashboard Portfolio dashboard that provides centralized access to all your investments | |
| Headlines Timeline Stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity | |
| Sectors List of equity sectors categorizing publicly traded companies based on their primary business activities | |
| Options Analysis Analyze and evaluate options and option chains as a potential hedge for your portfolios | |
| Aroon Oscillator Analyze current equity momentum using Aroon Oscillator and other momentum ratios |