Correlation Between SYLVANIA PLAT and Pentair Plc

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

By analyzing existing cross correlation between SYLVANIA PLAT DL and Pentair plc, you can compare the effects of market volatilities on SYLVANIA PLAT and Pentair Plc 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 SYLVANIA PLAT with a short position of Pentair Plc. Check out your portfolio center. Please also check ongoing floating volatility patterns of SYLVANIA PLAT and Pentair Plc.

Diversification Opportunities for SYLVANIA PLAT and Pentair Plc

-0.22

Correlation Coefficient

SYLVANIA PLAT  Pentair Plc

Very good diversification

The 3 months correlation between SYLVANIA and Pentair is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding SYLVANIA PLAT DL and Pentair plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pentair plc and SYLVANIA PLAT 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 SYLVANIA PLAT DL are associated (or correlated) with Pentair Plc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pentair plc has no effect on the direction of SYLVANIA PLAT i.e., SYLVANIA PLAT and Pentair Plc go up and down completely randomly.

Pair Corralation between SYLVANIA PLAT and Pentair Plc

Assuming the 90 days horizon SYLVANIA PLAT DL is expected to generate 1.9 times more return on investment than Pentair Plc. However, SYLVANIA PLAT is 1.9 times more volatile than Pentair plc. It trades about -0.06 of its potential returns per unit of risk. Pentair plc is currently generating about -0.19 per unit of risk. If you would invest  52.00  in SYLVANIA PLAT DL on October 10, 2024 and sell it today you would lose (2.00) from holding SYLVANIA PLAT DL or give up 3.85% of portfolio value over 90 days.

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

SYLVANIA PLAT DL  vs.  Pentair plc

SYLVANIA PLAT DL

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SYLVANIA PLAT DL has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, SYLVANIA PLAT is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pentair plc

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Pentair plc are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, Pentair Plc may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with SYLVANIA PLAT and Pentair Plc

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

The idea behind SYLVANIA PLAT DL and Pentair plc 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.