Correlation Between Global E and Pentair PLC

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

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

Diversification Opportunities for Global E and Pentair PLC

0.82

Correlation Coefficient

Global E  Pentair PLC

Very poor diversification

The 3 months correlation between Global and Pentair is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Global E Online and Pentair PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pentair PLC and Global E 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 Global E Online 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 Global E i.e., Global E and Pentair PLC go up and down completely randomly.

Pair Corralation between Global E and Pentair PLC

Given the investment horizon of 90 days Global E Online is expected to generate 2.05 times more return on investment than Pentair PLC. However, Global E is 2.05 times more volatile than Pentair PLC. It trades about 0.07 of its potential returns per unit of risk. Pentair PLC is currently generating about 0.13 per unit of risk. If you would invest  3,418  in Global E Online on September 24, 2024 and sell it today you would earn a total of  2,042  from holding Global E Online or generate 59.74% return on investment over 90 days.

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

Global E Online  vs.  Pentair PLC

Global E Online

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Global E Online are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady fundamental drivers, Global E exhibited solid returns over the last few months and may actually be approaching a breakup point.

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. Even with relatively invariable basic indicators, Pentair PLC is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Global E and Pentair PLC

The main advantage of trading using opposite Global E and Pentair PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Global E 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 Global E Online 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..