Correlation Between Pinnacle Investment and EP Financial

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

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

Diversification Opportunities for Pinnacle Investment and EP Financial

0.62

Correlation Coefficient

Pinnacle Investment  EP Financial

Poor diversification

The 3 months correlation between Pinnacle and EP1 is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Pinnacle Investment Management and EP Financial Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EP Financial Group and Pinnacle Investment 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 Investment Management are associated (or correlated) with EP Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EP Financial Group has no effect on the direction of Pinnacle Investment i.e., Pinnacle Investment and EP Financial go up and down completely randomly.

Pair Corralation between Pinnacle Investment and EP Financial

Assuming the 90 days trading horizon Pinnacle Investment Management is expected to generate 1.18 times more return on investment than EP Financial. However, Pinnacle Investment is 1.18 times more volatile than EP Financial Group. It trades about 0.19 of its potential returns per unit of risk. EP Financial Group is currently generating about -0.03 per unit of risk. If you would invest  2,125  in Pinnacle Investment Management on September 16, 2024 and sell it today you would earn a total of  226.00  from holding Pinnacle Investment Management or generate 10.64% return on investment over 90 days.

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

Pinnacle Investment Management  vs.  EP Financial Group

Pinnacle Investment

Risk-Adjusted Performance

20 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Pinnacle Investment Management are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain forward indicators, Pinnacle Investment unveiled solid returns over the last few months and may actually be approaching a breakup point.

EP Financial Group

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in EP Financial Group are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, EP Financial unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Pinnacle Investment and EP Financial

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

The idea behind Pinnacle Investment Management and EP Financial Group 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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.