Correlation Between All Asset and Pinnacle Sherman

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

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

Diversification Opportunities for All Asset and Pinnacle Sherman

0.89

Correlation Coefficient

All Asset  Pinnacle Sherman

Very poor diversification

The 3 months correlation between All and Pinnacle is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding All Asset Fund 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 All Asset 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 All Asset Fund 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 All Asset i.e., All Asset and Pinnacle Sherman go up and down completely randomly.

Pair Corralation between All Asset and Pinnacle Sherman

Assuming the 90 days horizon All Asset Fund is expected to generate 0.38 times more return on investment than Pinnacle Sherman. However, All Asset Fund is 2.66 times less risky than Pinnacle Sherman. It trades about -0.2 of its potential returns per unit of risk. Pinnacle Sherman Multi Strategy is currently generating about -0.24 per unit of risk. If you would invest  1,100  in All Asset Fund on January 26, 2024 and sell it today you would lose (17.00) from holding All Asset Fund or give up 1.55% of portfolio value over 90 days.

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

All Asset Fund  vs.  Pinnacle Sherman Multi Strateg

All Asset Fund

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in All Asset Fund are ranked lower than 1 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong fundamental indicators, All Asset is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pinnacle Sherman Multi

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Pinnacle Sherman Multi Strategy are ranked lower than 1 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong technical indicators, Pinnacle Sherman is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with All Asset and Pinnacle Sherman

The main advantage of trading using opposite All Asset and Pinnacle Sherman positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if All Asset 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 All Asset Fund 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.

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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.