Correlation Between LINKBANCORP and Pinnacle Financial

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

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

Diversification Opportunities for LINKBANCORP and Pinnacle Financial

0.95

Correlation Coefficient

LINKBANCORP  Pinnacle Financial

Almost no diversification

The 3 months correlation between LINKBANCORP and Pinnacle is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding LINKBANCORP and Pinnacle Financial Partners in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pinnacle Financial and LINKBANCORP 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 LINKBANCORP are associated (or correlated) with Pinnacle Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pinnacle Financial has no effect on the direction of LINKBANCORP i.e., LINKBANCORP and Pinnacle Financial go up and down completely randomly.

Pair Corralation between LINKBANCORP and Pinnacle Financial

Given the investment horizon of 90 days LINKBANCORP is expected to generate 2.21 times less return on investment than Pinnacle Financial. But when comparing it to its historical volatility, LINKBANCORP is 1.07 times less risky than Pinnacle Financial. It trades about 0.09 of its potential returns per unit of risk. Pinnacle Financial Partners is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest  7,648  in Pinnacle Financial Partners on September 3, 2024 and sell it today you would earn a total of  5,063  from holding Pinnacle Financial Partners or generate 66.2% return on investment over 90 days.

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

LINKBANCORP  vs.  Pinnacle Financial Partners

LINKBANCORP

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in LINKBANCORP are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite somewhat conflicting forward-looking signals, LINKBANCORP sustained solid returns over the last few months and may actually be approaching a breakup point.

Pinnacle Financial

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Pinnacle Financial Partners are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Even with relatively unfluctuating technical and fundamental indicators, Pinnacle Financial reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with LINKBANCORP and Pinnacle Financial

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

The idea behind LINKBANCORP and Pinnacle Financial Partners 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 Stocks Directory module to find actively traded stocks across global markets.