Correlation Between Brockhaus Capital and Pentair Plc

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

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

Diversification Opportunities for Brockhaus Capital and Pentair Plc

-0.26

Correlation Coefficient

Brockhaus Capital  Pentair Plc

Very good diversification

The 3 months correlation between Brockhaus and Pentair is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding Brockhaus Capital Management and Pentair plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pentair plc and Brockhaus Capital 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 Brockhaus Capital Management 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 Brockhaus Capital i.e., Brockhaus Capital and Pentair Plc go up and down completely randomly.

Pair Corralation between Brockhaus Capital and Pentair Plc

Assuming the 90 days trading horizon Brockhaus Capital Management is expected to generate 2.33 times more return on investment than Pentair Plc. However, Brockhaus Capital is 2.33 times more volatile than Pentair plc. It trades about 0.04 of its potential returns per unit of risk. Pentair plc is currently generating about -0.19 per unit of risk. If you would invest  2,240  in Brockhaus Capital Management on December 1, 2024 and sell it today you would earn a total of  120.00  from holding Brockhaus Capital Management or generate 5.36% return on investment over 90 days.

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

Brockhaus Capital Management  vs.  Pentair plc

Brockhaus Capital

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Brockhaus Capital Management are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile technical indicators, Brockhaus Capital may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pentair plc

Risk-Adjusted Performance

Very Weak

Over the last 90 days Pentair plc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Brockhaus Capital and Pentair Plc

The main advantage of trading using opposite Brockhaus Capital and Pentair Plc positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Brockhaus Capital 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 Brockhaus Capital Management 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.