Correlation Between Pinnacle Sherman and Waste Management

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

Diversification Opportunities for Pinnacle Sherman and Waste Management

-0.24

Correlation Coefficient

Pinnacle Sherman  Waste Management

Very good diversification

The 3 months correlation between Pinnacle and Waste is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding Pinnacle Sherman Multi Strateg and Waste Management in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Waste Management 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 Waste Management. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Waste Management has no effect on the direction of Pinnacle Sherman i.e., Pinnacle Sherman and Waste Management go up and down completely randomly.

Pair Corralation between Pinnacle Sherman and Waste Management

Assuming the 90 days horizon Pinnacle Sherman Multi Strategy is expected to under-perform the Waste Management. In addition to that, Pinnacle Sherman is 1.2 times more volatile than Waste Management. It trades about -0.07 of its total potential returns per unit of risk. Waste Management is currently generating about 0.19 per unit of volatility. If you would invest  20,152  in Waste Management on December 29, 2024 and sell it today you would earn a total of  2,750  from holding Waste Management or generate 13.65% return on investment over 90 days.

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

Pinnacle Sherman Multi Strateg  vs.  Waste Management

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.

Waste Management

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Waste Management are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of very weak primary indicators, Waste Management displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Pinnacle Sherman and Waste Management

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

The idea behind Pinnacle Sherman Multi Strategy and Waste Management 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.