Correlation Between Rockwell Automation and Pinterest

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

By analyzing existing cross correlation between Rockwell Automation and Pinterest, you can compare the effects of market volatilities on Rockwell Automation and Pinterest 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 Rockwell Automation with a short position of Pinterest. Check out your portfolio center. Please also check ongoing floating volatility patterns of Rockwell Automation and Pinterest.

Diversification Opportunities for Rockwell Automation and Pinterest

-0.17

Correlation Coefficient

Rockwell Automation  Pinterest

Good diversification

The 3 months correlation between Rockwell and Pinterest is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding Rockwell Automation and Pinterest in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pinterest and Rockwell Automation 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 Rockwell Automation are associated (or correlated) with Pinterest. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pinterest has no effect on the direction of Rockwell Automation i.e., Rockwell Automation and Pinterest go up and down completely randomly.

Pair Corralation between Rockwell Automation and Pinterest

Considering the 90-day investment horizon Rockwell Automation is expected to generate 0.83 times more return on investment than Pinterest. However, Rockwell Automation is 1.2 times less risky than Pinterest. It trades about -0.03 of its potential returns per unit of risk. Pinterest is currently generating about -0.08 per unit of risk. If you would invest  28,641  in Rockwell Automation on January 29, 2024 and sell it today you would lose (629.00) from holding Rockwell Automation or give up 2.2% of portfolio value over 90 days.

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

Rockwell Automation  vs.  Pinterest

Rockwell Automation

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pinterest

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Pinterest has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with Rockwell Automation and Pinterest

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

The idea behind Rockwell Automation and Pinterest 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.