Correlation Between Pentair Plc and Visa

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

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

Diversification Opportunities for Pentair Plc and Visa

0.83

Correlation Coefficient

Pentair Plc  Visa

Very poor diversification

The 3 months correlation between Pentair and Visa is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Pentair plc and Visa Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Visa Inc and Pentair Plc 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 Pentair plc are associated (or correlated) with Visa. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Visa Inc has no effect on the direction of Pentair Plc i.e., Pentair Plc and Visa go up and down completely randomly.

Pair Corralation between Pentair Plc and Visa

Assuming the 90 days trading horizon Pentair plc is expected to generate 0.21 times more return on investment than Visa. However, Pentair plc is 4.8 times less risky than Visa. It trades about -0.11 of its potential returns per unit of risk. Visa Inc is currently generating about -0.1 per unit of risk. If you would invest  62,186  in Pentair plc on October 25, 2024 and sell it today you would lose (446.00) from holding Pentair plc or give up 0.72% of portfolio value over 90 days.

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

Pentair plc  vs.  Visa Inc

Pentair plc

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Pentair plc are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Pentair Plc may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Visa Inc

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Visa Inc are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Visa sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Pentair Plc and Visa

The main advantage of trading using opposite Pentair Plc and Visa positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pentair Plc position performs unexpectedly, Visa 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 Visa will offset losses from the drop in Visa's long position.

The idea behind Pentair plc and Visa Inc 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.