Correlation Between IShares MSCI and Pinnacle Sherman

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

By analyzing existing cross correlation between iShares MSCI USA and Pinnacle Sherman Multi Strategy, you can compare the effects of market volatilities on IShares MSCI and Pinnacle Sherman 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 IShares MSCI with a short position of Pinnacle Sherman. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares MSCI and Pinnacle Sherman.

Diversification Opportunities for IShares MSCI and Pinnacle Sherman

0.96

Correlation Coefficient

IShares MSCI  Pinnacle Sherman

Almost no diversification

The 3 months correlation between IShares and Pinnacle is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding iShares MSCI USA and Pinnacle Sherman Multi Strateg in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pinnacle Sherman Multi and IShares MSCI 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 iShares MSCI USA are associated (or correlated) with Pinnacle Sherman. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pinnacle Sherman Multi has no effect on the direction of IShares MSCI i.e., IShares MSCI and Pinnacle Sherman go up and down completely randomly.

Pair Corralation between IShares MSCI and Pinnacle Sherman

Given the investment horizon of 90 days iShares MSCI USA is expected to generate 0.66 times more return on investment than Pinnacle Sherman. However, iShares MSCI USA is 1.51 times less risky than Pinnacle Sherman. It trades about -0.08 of its potential returns per unit of risk. Pinnacle Sherman Multi Strategy is currently generating about -0.09 per unit of risk. If you would invest  17,818  in iShares MSCI USA on December 30, 2024 and sell it today you would lose (857.00) from holding iShares MSCI USA or give up 4.81% of portfolio value over 90 days.

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

iShares MSCI USA  vs.  Pinnacle Sherman Multi Strateg

iShares MSCI USA

Risk-Adjusted Performance

Very Weak

Over the last 90 days iShares MSCI USA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, IShares MSCI is not utilizing all of its potentials. The recent stock price mess, may contribute to short-term losses for the institutional investors.

Pinnacle Sherman Multi

Risk-Adjusted Performance

Very Weak

Over the last 90 days Pinnacle Sherman Multi Strategy has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's technical indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Pair Trading with IShares MSCI and Pinnacle Sherman

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

The idea behind iShares MSCI USA and Pinnacle Sherman Multi Strategy 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.