Correlation Between Creo Medical and Pentair PLC

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

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

Diversification Opportunities for Creo Medical and Pentair PLC

-0.9

Correlation Coefficient

Creo Medical  Pentair PLC

Pay attention - limited upside

The 3 months correlation between Creo and Pentair is -0.9. Overlapping area represents the amount of risk that can be diversified away by holding Creo Medical Group and Pentair PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pentair PLC and Creo Medical 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 Creo Medical Group 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 Creo Medical i.e., Creo Medical and Pentair PLC go up and down completely randomly.

Pair Corralation between Creo Medical and Pentair PLC

Assuming the 90 days trading horizon Creo Medical Group is expected to under-perform the Pentair PLC. In addition to that, Creo Medical is 2.54 times more volatile than Pentair PLC. It trades about -0.07 of its total potential returns per unit of risk. Pentair PLC is currently generating about 0.12 per unit of volatility. If you would invest  10,135  in Pentair PLC on October 22, 2024 and sell it today you would earn a total of  214.00  from holding Pentair PLC or generate 2.11% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	94.44%
Values	Daily Returns

Creo Medical Group  vs.  Pentair PLC

Creo Medical Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Creo Medical Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Creo Medical is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pentair PLC

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Pentair PLC are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Pentair PLC is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Creo Medical and Pentair PLC

The main advantage of trading using opposite Creo Medical and Pentair PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Creo Medical 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 Creo Medical Group 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.

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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.