Correlation Between Noranda Aluminum and Pinnacle Financial
Can any of the company-specific risk be diversified away by investing in both Noranda Aluminum and Pinnacle 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 Noranda Aluminum and Pinnacle Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Noranda Aluminum Holding and Pinnacle Financial Partners, you can compare the effects of market volatilities on Noranda Aluminum and Pinnacle 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 Noranda Aluminum with a short position of Pinnacle Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Noranda Aluminum and Pinnacle Financial.
Diversification Opportunities for Noranda Aluminum and Pinnacle Financial
0.42 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Noranda and Pinnacle is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Noranda Aluminum Holding and Pinnacle Financial Partners in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pinnacle Financial and Noranda Aluminum 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 Noranda Aluminum Holding are associated (or correlated) with Pinnacle Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pinnacle Financial has no effect on the direction of Noranda Aluminum i.e., Noranda Aluminum and Pinnacle Financial go up and down completely randomly.
Pair Corralation between Noranda Aluminum and Pinnacle Financial
If you would invest (100.00) in Noranda Aluminum Holding on January 20, 2024 and sell it today you would earn a total of 100.00 from holding Noranda Aluminum Holding or generate -100.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 0.0% |
| Values | Daily Returns |
Noranda Aluminum Holding vs. Pinnacle Financial Partners
Performance |
| Timeline |
| Noranda Aluminum Holding |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Pinnacle Financial |
Noranda Aluminum and Pinnacle Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Noranda Aluminum and Pinnacle Financial
The main advantage of trading using opposite Noranda Aluminum and Pinnacle Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Noranda Aluminum position performs unexpectedly, Pinnacle 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 Pinnacle Financial will offset losses from the drop in Pinnacle Financial's long position.| Noranda Aluminum vs. Vistra Energy Corp | Noranda Aluminum vs. Hanover Foods | Noranda Aluminum vs. Nextera Energy | Noranda Aluminum vs. Bridgford Foods |
| Pinnacle Financial vs. Home Bancorp | Pinnacle Financial vs. Heritage Financial | Pinnacle Financial vs. Lake Shore Bancorp |
Check out your portfolio center.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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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