Correlation Between Gol Intelligent and Pentair Plc

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

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

Diversification Opportunities for Gol Intelligent and Pentair Plc

0.0

Correlation Coefficient

Gol Intelligent  Pentair Plc

Pay attention - limited upside

The 3 months correlation between Gol and Pentair is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Gol Intelligent Airlines and Pentair plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pentair plc and Gol Intelligent 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 Gol Intelligent Airlines 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 Gol Intelligent i.e., Gol Intelligent and Pentair Plc go up and down completely randomly.

Pair Corralation between Gol Intelligent and Pentair Plc

Assuming the 90 days trading horizon Gol Intelligent Airlines is expected to under-perform the Pentair Plc. In addition to that, Gol Intelligent is 4.92 times more volatile than Pentair plc. It trades about -0.01 of its total potential returns per unit of risk. Pentair plc is currently generating about 0.11 per unit of volatility. If you would invest  5,192  in Pentair plc on September 19, 2024 and sell it today you would earn a total of  4,978  from holding Pentair plc or generate 95.88% return on investment over 90 days.

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

Gol Intelligent Airlines  vs.  Pentair plc

Gol Intelligent Airlines

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pentair plc

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Pentair plc are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Pentair Plc reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Gol Intelligent and Pentair Plc

The main advantage of trading using opposite Gol Intelligent and Pentair Plc positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gol Intelligent 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 Gol Intelligent Airlines 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.