Correlation Between Pinnacle Investment and Capitol Health

Can any of the company-specific risk be diversified away by investing in both Pinnacle Investment and Capitol Health 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 Capitol Health 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 Capitol Health, you can compare the effects of market volatilities on Pinnacle Investment and Capitol Health 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 Capitol Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pinnacle Investment and Capitol Health.

Diversification Opportunities for Pinnacle Investment and Capitol Health

0.62

Correlation Coefficient

Pinnacle Investment  Capitol Health

Poor diversification

The 3 months correlation between Pinnacle and Capitol is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Pinnacle Investment Management and Capitol Health in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Capitol Health 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 Capitol Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Capitol Health has no effect on the direction of Pinnacle Investment i.e., Pinnacle Investment and Capitol Health go up and down completely randomly.

Pair Corralation between Pinnacle Investment and Capitol Health

Assuming the 90 days trading horizon Pinnacle Investment Management is expected to generate 0.73 times more return on investment than Capitol Health. However, Pinnacle Investment Management is 1.37 times less risky than Capitol Health. It trades about 0.41 of its potential returns per unit of risk. Capitol Health is currently generating about 0.05 per unit of risk. If you would invest  2,024  in Pinnacle Investment Management on September 5, 2024 and sell it today you would earn a total of  412.00  from holding Pinnacle Investment Management or generate 20.36% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Pinnacle Investment Management  vs.  Capitol Health

Pinnacle Investment

Risk-Adjusted Performance

27 of 100

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Pinnacle Investment Management are ranked lower than 27 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak forward indicators, Pinnacle Investment unveiled solid returns over the last few months and may actually be approaching a breakup point.

Capitol Health

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Capitol Health are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain forward-looking indicators, Capitol Health unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Pinnacle Investment and Capitol Health

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

The idea behind Pinnacle Investment Management and Capitol Health 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.

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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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..