Correlation Between Pinnacle Sherman and SEI Investments

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

Diversification Opportunities for Pinnacle Sherman and SEI Investments

0.79

Correlation Coefficient

Pinnacle Sherman  SEI Investments

Poor diversification

The 3 months correlation between Pinnacle and SEI is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Pinnacle Sherman Multi Strateg and SEI Investments in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SEI Investments 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 SEI Investments. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SEI Investments has no effect on the direction of Pinnacle Sherman i.e., Pinnacle Sherman and SEI Investments go up and down completely randomly.

Pair Corralation between Pinnacle Sherman and SEI Investments

Assuming the 90 days horizon Pinnacle Sherman Multi Strategy is expected to generate 1.11 times more return on investment than SEI Investments. However, Pinnacle Sherman is 1.11 times more volatile than SEI Investments. It trades about -0.06 of its potential returns per unit of risk. SEI Investments is currently generating about -0.08 per unit of risk. If you would invest  1,310  in Pinnacle Sherman Multi Strategy on December 30, 2024 and sell it today you would lose (80.00) from holding Pinnacle Sherman Multi Strategy or give up 6.11% of portfolio value over 90 days.

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

Pinnacle Sherman Multi Strateg  vs.  SEI Investments

Pinnacle Sherman Multi

Risk-Adjusted Performance

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.

SEI Investments

Risk-Adjusted Performance

Very Weak

Over the last 90 days SEI Investments has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest inconsistent performance, the Stock's forward indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Pair Trading with Pinnacle Sherman and SEI Investments

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

The idea behind Pinnacle Sherman Multi Strategy and SEI Investments 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.