Correlation Between KBC Groep and Pinnacle Bancshares

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

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

Diversification Opportunities for KBC Groep and Pinnacle Bancshares

-0.37

Correlation Coefficient

KBC Groep  Pinnacle Bancshares

Very good diversification

The 3 months correlation between KBC and Pinnacle is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding KBC Groep NV and Pinnacle Bancshares in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pinnacle Bancshares and KBC Groep 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 KBC Groep NV are associated (or correlated) with Pinnacle Bancshares. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pinnacle Bancshares has no effect on the direction of KBC Groep i.e., KBC Groep and Pinnacle Bancshares go up and down completely randomly.

Pair Corralation between KBC Groep and Pinnacle Bancshares

If you would invest  3,557  in KBC Groep NV on September 28, 2024 and sell it today you would earn a total of  293.00  from holding KBC Groep NV or generate 8.24% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	5.0%
Values	Daily Returns

KBC Groep NV  vs.  Pinnacle Bancshares

KBC Groep NV

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pinnacle Bancshares

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Pinnacle Bancshares has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong essential indicators, Pinnacle Bancshares is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with KBC Groep and Pinnacle Bancshares

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

The idea behind KBC Groep NV and Pinnacle Bancshares 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.