Correlation Between Pinnacle Financial and WesBanco

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

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

Diversification Opportunities for Pinnacle Financial and WesBanco

0.71

Correlation Coefficient

Pinnacle Financial  WesBanco

Poor diversification

The 3 months correlation between Pinnacle and WesBanco is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Pinnacle Financial Partners and WesBanco in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WesBanco and Pinnacle Financial 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 Financial Partners are associated (or correlated) with WesBanco. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WesBanco has no effect on the direction of Pinnacle Financial i.e., Pinnacle Financial and WesBanco go up and down completely randomly.

Pair Corralation between Pinnacle Financial and WesBanco

Assuming the 90 days horizon Pinnacle Financial is expected to generate 1.29 times less return on investment than WesBanco. In addition to that, Pinnacle Financial is 2.57 times more volatile than WesBanco. It trades about 0.03 of its total potential returns per unit of risk. WesBanco is currently generating about 0.1 per unit of volatility. If you would invest  2,479  in WesBanco on December 30, 2024 and sell it today you would earn a total of  43.00  from holding WesBanco or generate 1.73% return on investment over 90 days.

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

Pinnacle Financial Partners  vs.  WesBanco

Pinnacle Financial

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Pinnacle Financial Partners are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable basic indicators, Pinnacle Financial is not utilizing all of its potentials. The recent stock price agitation, may contribute to short-term losses for the retail investors.

WesBanco

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in WesBanco are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable fundamental indicators, WesBanco is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Pinnacle Financial and WesBanco

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

The idea behind Pinnacle Financial Partners and WesBanco 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..