Correlation Between Ford and Pinnacle Entertainment

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

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

Diversification Opportunities for Ford and Pinnacle Entertainment

0.0

Correlation Coefficient

Ford  Pinnacle Entertainment

Pay attention - limited upside

The 3 months correlation between Ford and Pinnacle is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and Pinnacle Entertainment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pinnacle Entertainment and Ford 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 Ford Motor are associated (or correlated) with Pinnacle Entertainment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pinnacle Entertainment has no effect on the direction of Ford i.e., Ford and Pinnacle Entertainment go up and down completely randomly.

Pair Corralation between Ford and Pinnacle Entertainment

If you would invest (100.00) in Pinnacle Entertainment on October 12, 2024 and sell it today you would earn a total of  100.00  from holding Pinnacle Entertainment or generate -100.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Ford Motor  vs.  Pinnacle Entertainment

Ford Motor

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ford Motor has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unfluctuating performance, the Stock's technical and fundamental indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pinnacle Entertainment

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Pinnacle Entertainment has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, Pinnacle Entertainment is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Ford and Pinnacle Entertainment

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

The idea behind Ford Motor and Pinnacle Entertainment 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.