Correlation Between ServisFirst Bancshares and Pinnacle Financial

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

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

Diversification Opportunities for ServisFirst Bancshares and Pinnacle Financial

0.46

Correlation Coefficient

ServisFirst Bancshares  Pinnacle Financial

Very weak diversification

The 3 months correlation between ServisFirst and Pinnacle is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding ServisFirst Bancshares and Pinnacle Financial Partners in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pinnacle Financial and ServisFirst Bancshares 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 ServisFirst Bancshares 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 ServisFirst Bancshares i.e., ServisFirst Bancshares and Pinnacle Financial go up and down completely randomly.

Pair Corralation between ServisFirst Bancshares and Pinnacle Financial

Given the investment horizon of 90 days ServisFirst Bancshares is expected to generate 0.5 times more return on investment than Pinnacle Financial. However, ServisFirst Bancshares is 2.02 times less risky than Pinnacle Financial. It trades about -0.17 of its potential returns per unit of risk. Pinnacle Financial Partners is currently generating about -0.44 per unit of risk. If you would invest  8,205  in ServisFirst Bancshares on May 3, 2025 and sell it today you would lose (474.00) from holding ServisFirst Bancshares or give up 5.78% of portfolio value over 90 days.

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

ServisFirst Bancshares  vs.  Pinnacle Financial Partners

ServisFirst Bancshares

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in ServisFirst Bancshares are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak fundamental drivers, ServisFirst Bancshares may actually be approaching a critical reversion point that can send shares even higher in September 2025.

Pinnacle Financial

Risk-Adjusted Performance

Very Weak

Over the last 90 days Pinnacle Financial Partners has generated negative risk-adjusted returns adding no value to investors with long positions. Even with unsteady performance in the last few months, the Stock's technical and fundamental indicators remain relatively invariable which may send shares a bit higher in September 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with ServisFirst Bancshares and Pinnacle Financial

The main advantage of trading using opposite ServisFirst Bancshares and Pinnacle Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ServisFirst Bancshares 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.

The idea behind ServisFirst Bancshares and Pinnacle Financial Partners 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.