Correlation Between Barloworld and Pinnacle Sherman

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

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

Diversification Opportunities for Barloworld and Pinnacle Sherman

-0.08

Correlation Coefficient

Barloworld  Pinnacle Sherman

Good diversification

The 3 months correlation between Barloworld and Pinnacle is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding Barloworld Ltd ADR and Pinnacle Sherman Multi Strateg in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pinnacle Sherman Multi and Barloworld 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 Barloworld Ltd ADR are associated (or correlated) with Pinnacle Sherman. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pinnacle Sherman Multi has no effect on the direction of Barloworld i.e., Barloworld and Pinnacle Sherman go up and down completely randomly.

Pair Corralation between Barloworld and Pinnacle Sherman

Assuming the 90 days horizon Barloworld is expected to generate 8.27 times less return on investment than Pinnacle Sherman. In addition to that, Barloworld is 5.63 times more volatile than Pinnacle Sherman Multi Strategy. It trades about 0.0 of its total potential returns per unit of risk. Pinnacle Sherman Multi Strategy is currently generating about 0.19 per unit of volatility. If you would invest  1,338  in Pinnacle Sherman Multi Strategy on August 30, 2024 and sell it today you would earn a total of  125.00  from holding Pinnacle Sherman Multi Strategy or generate 9.34% return on investment over 90 days.

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

Barloworld Ltd ADR  vs.  Pinnacle Sherman Multi Strateg

Barloworld ADR

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Barloworld Ltd ADR has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Barloworld is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pinnacle Sherman Multi

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Pinnacle Sherman Multi Strategy are ranked lower than 14 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak technical indicators, Pinnacle Sherman may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Pair Trading with Barloworld and Pinnacle Sherman

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

The idea behind Barloworld Ltd ADR and Pinnacle Sherman Multi Strategy 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.