Correlation Between Pinnacle Bancshares and KBC Groep

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

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

Diversification Opportunities for Pinnacle Bancshares and KBC Groep

-0.25

Correlation Coefficient

Pinnacle Bancshares  KBC Groep

Very good diversification

The 3 months correlation between Pinnacle and KBC is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding Pinnacle Bancshares and KBC Groep NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KBC Groep NV and Pinnacle Bancshares 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 Bancshares are associated (or correlated) with KBC Groep. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KBC Groep NV has no effect on the direction of Pinnacle Bancshares i.e., Pinnacle Bancshares and KBC Groep go up and down completely randomly.

Pair Corralation between Pinnacle Bancshares and KBC Groep

Given the investment horizon of 90 days Pinnacle Bancshares is expected to under-perform the KBC Groep. In addition to that, Pinnacle Bancshares is 1.14 times more volatile than KBC Groep NV. It trades about -0.07 of its total potential returns per unit of risk. KBC Groep NV is currently generating about 0.07 per unit of volatility. If you would invest  2,314  in KBC Groep NV on September 28, 2024 and sell it today you would earn a total of  1,536  from holding KBC Groep NV or generate 66.38% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	8.99%
Values	Daily Returns

Pinnacle Bancshares  vs.  KBC Groep NV

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.

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 current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Pinnacle Bancshares and KBC Groep

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

The idea behind Pinnacle Bancshares and KBC Groep NV 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.