Correlation Between United Overseas and Pinnacle Bancshares
Can any of the company-specific risk be diversified away by investing in both United Overseas and Pinnacle Bancshares 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 United Overseas and Pinnacle Bancshares into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between United Overseas Bank and Pinnacle Bancshares, you can compare the effects of market volatilities on United Overseas and Pinnacle Bancshares 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 United Overseas with a short position of Pinnacle Bancshares. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Overseas and Pinnacle Bancshares.
Diversification Opportunities for United Overseas and Pinnacle Bancshares
0.3 | Correlation Coefficient |
Weak diversification
The 3 months correlation between United and Pinnacle is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding United Overseas Bank and Pinnacle Bancshares in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pinnacle Bancshares and United Overseas 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 United Overseas Bank are associated (or correlated) with Pinnacle Bancshares. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pinnacle Bancshares has no effect on the direction of United Overseas i.e., United Overseas and Pinnacle Bancshares go up and down completely randomly.
Pair Corralation between United Overseas and Pinnacle Bancshares
Assuming the 90 days horizon United Overseas Bank is expected to generate 0.59 times more return on investment than Pinnacle Bancshares. However, United Overseas Bank is 1.69 times less risky than Pinnacle Bancshares. It trades about 0.06 of its potential returns per unit of risk. Pinnacle Bancshares is currently generating about -0.08 per unit of risk. If you would invest 4,066 in United Overseas Bank on August 26, 2024 and sell it today you would earn a total of 1,339 from holding United Overseas Bank or generate 32.93% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 8.85% |
| Values | Daily Returns |
United Overseas Bank vs. Pinnacle Bancshares
Performance |
| Timeline |
| United Overseas Bank |
| Pinnacle Bancshares |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
United Overseas and Pinnacle Bancshares Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with United Overseas and Pinnacle Bancshares
The main advantage of trading using opposite United Overseas and Pinnacle Bancshares positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Overseas position performs unexpectedly, Pinnacle Bancshares 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 Bancshares will offset losses from the drop in Pinnacle Bancshares' long position.| United Overseas vs. KBC Groep NV | United Overseas vs. DBS Group Holdings | United Overseas vs. HomeStreet | United Overseas vs. Bank of Hawaii |
| Pinnacle Bancshares vs. Eastern Michigan Financial | Pinnacle Bancshares vs. Bank of Utica | Pinnacle Bancshares vs. Delhi Bank Corp | Pinnacle Bancshares vs. CCSB Financial Corp |
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 Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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