Correlation Between Mulberry Group and Pentair PLC

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

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

Diversification Opportunities for Mulberry Group and Pentair PLC

-0.75

Correlation Coefficient

Mulberry Group  Pentair PLC

Pay attention - limited upside

The 3 months correlation between Mulberry and Pentair is -0.75. Overlapping area represents the amount of risk that can be diversified away by holding Mulberry Group PLC and Pentair PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pentair PLC and Mulberry Group 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 Mulberry Group PLC 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 Mulberry Group i.e., Mulberry Group and Pentair PLC go up and down completely randomly.

Pair Corralation between Mulberry Group and Pentair PLC

Assuming the 90 days trading horizon Mulberry Group is expected to generate 7.02 times less return on investment than Pentair PLC. In addition to that, Mulberry Group is 2.34 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 0.16 per unit of volatility. If you would invest  7,472  in Pentair PLC on September 29, 2024 and sell it today you would earn a total of  2,658  from holding Pentair PLC or generate 35.57% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	96.85%
Values	Daily Returns

Mulberry Group PLC  vs.  Pentair PLC

Mulberry Group PLC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Mulberry Group PLC has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's technical and fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Pentair PLC

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Pentair PLC are ranked lower than 5 (%) 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 latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Mulberry Group and Pentair PLC

The main advantage of trading using opposite Mulberry Group and Pentair PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mulberry Group 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 Mulberry Group PLC 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.