Correlation Between Pinnacle Financial and LINKBANCORP

Can any of the company-specific risk be diversified away by investing in both Pinnacle Financial and LINKBANCORP 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 Financial and LINKBANCORP into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Pinnacle Financial Partners and LINKBANCORP, you can compare the effects of market volatilities on Pinnacle Financial and LINKBANCORP 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 Financial with a short position of LINKBANCORP. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pinnacle Financial and LINKBANCORP.

Diversification Opportunities for Pinnacle Financial and LINKBANCORP

0.95

Correlation Coefficient

Pinnacle Financial  LINKBANCORP

Almost no diversification

The 3 months correlation between Pinnacle and LINKBANCORP is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding Pinnacle Financial Partners and LINKBANCORP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LINKBANCORP and Pinnacle Financial 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 Financial Partners are associated (or correlated) with LINKBANCORP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LINKBANCORP has no effect on the direction of Pinnacle Financial i.e., Pinnacle Financial and LINKBANCORP go up and down completely randomly.

Pair Corralation between Pinnacle Financial and LINKBANCORP

Given the investment horizon of 90 days Pinnacle Financial Partners is expected to generate 1.31 times more return on investment than LINKBANCORP. However, Pinnacle Financial is 1.31 times more volatile than LINKBANCORP. It trades about 0.17 of its potential returns per unit of risk. LINKBANCORP is currently generating about 0.17 per unit of risk. If you would invest  9,797  in Pinnacle Financial Partners on August 31, 2024 and sell it today you would earn a total of  2,928  from holding Pinnacle Financial Partners or generate 29.89% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	98.44%
Values	Daily Returns

Pinnacle Financial Partners  vs.  LINKBANCORP

Pinnacle Financial

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Pinnacle Financial Partners are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Even with relatively unsteady technical and fundamental indicators, Pinnacle Financial reported solid returns over the last few months and may actually be approaching a breakup point.

LINKBANCORP

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in LINKBANCORP are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite somewhat conflicting forward-looking signals, LINKBANCORP sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Pinnacle Financial and LINKBANCORP

The main advantage of trading using opposite Pinnacle Financial and LINKBANCORP positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pinnacle Financial position performs unexpectedly, LINKBANCORP 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 LINKBANCORP will offset losses from the drop in LINKBANCORP's long position.

The idea behind Pinnacle Financial Partners and LINKBANCORP pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.