Correlation Between Pinnacle Sherman and Cajxx

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

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

Diversification Opportunities for Pinnacle Sherman and Cajxx

-0.71

Correlation Coefficient

Pinnacle Sherman  Cajxx

Pay attention - limited upside

The 3 months correlation between Pinnacle and Cajxx is -0.71. Overlapping area represents the amount of risk that can be diversified away by holding Pinnacle Sherman Multi Strateg and Cajxx in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cajxx and Pinnacle Sherman 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 Sherman Multi Strategy are associated (or correlated) with Cajxx. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cajxx has no effect on the direction of Pinnacle Sherman i.e., Pinnacle Sherman and Cajxx go up and down completely randomly.

Pair Corralation between Pinnacle Sherman and Cajxx

Assuming the 90 days horizon Pinnacle Sherman Multi Strategy is expected to under-perform the Cajxx. But the mutual fund apears to be less risky and, when comparing its historical volatility, Pinnacle Sherman Multi Strategy is 59.65 times less risky than Cajxx. The mutual fund trades about -0.02 of its potential returns per unit of risk. The Cajxx is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  492.00  in Cajxx on September 29, 2024 and sell it today you would lose (392.00) from holding Cajxx or give up 79.67% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	98.46%
Values	Daily Returns

Pinnacle Sherman Multi Strateg  vs.  Cajxx

Pinnacle Sherman Multi

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Pinnacle Sherman Multi Strategy has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong technical indicators, Pinnacle Sherman is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Cajxx

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Cajxx are ranked lower than 8 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Cajxx showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Pinnacle Sherman and Cajxx

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

The idea behind Pinnacle Sherman Multi Strategy and Cajxx 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.