Correlation Between Pinnacle Investment and Insurance Australia

Can any of the company-specific risk be diversified away by investing in both Pinnacle Investment and Insurance Australia 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 Insurance Australia 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 Insurance Australia Group, you can compare the effects of market volatilities on Pinnacle Investment and Insurance Australia 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 Insurance Australia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pinnacle Investment and Insurance Australia.

Diversification Opportunities for Pinnacle Investment and Insurance Australia

0.91

Correlation Coefficient

Pinnacle Investment  Insurance Australia

Almost no diversification

The 3 months correlation between Pinnacle and Insurance is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Pinnacle Investment Management and Insurance Australia Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Insurance Australia 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 Insurance Australia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Insurance Australia has no effect on the direction of Pinnacle Investment i.e., Pinnacle Investment and Insurance Australia go up and down completely randomly.

Pair Corralation between Pinnacle Investment and Insurance Australia

Assuming the 90 days trading horizon Pinnacle Investment Management is expected to generate 1.53 times more return on investment than Insurance Australia. However, Pinnacle Investment is 1.53 times more volatile than Insurance Australia Group. It trades about 0.13 of its potential returns per unit of risk. Insurance Australia Group is currently generating about 0.1 per unit of risk. If you would invest  948.00  in Pinnacle Investment Management on October 22, 2024 and sell it today you would earn a total of  1,421  from holding Pinnacle Investment Management or generate 149.89% return on investment over 90 days.

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

Pinnacle Investment Management  vs.  Insurance Australia Group

Pinnacle Investment

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Pinnacle Investment Management are ranked lower than 13 (%) 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.

Insurance Australia

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Insurance Australia Group are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain technical and fundamental indicators, Insurance Australia unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Pinnacle Investment and Insurance Australia

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

The idea behind Pinnacle Investment Management and Insurance Australia 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.