Correlation Between Pentair PLC and Element Global

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

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

Diversification Opportunities for Pentair PLC and Element Global

0.0

Correlation Coefficient

Pentair PLC  Element Global

Pay attention - limited upside

The 3 months correlation between Pentair and Element is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Pentair PLC and Element Global in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Element Global 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 Element Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Element Global has no effect on the direction of Pentair PLC i.e., Pentair PLC and Element Global go up and down completely randomly.

Pair Corralation between Pentair PLC and Element Global

If you would invest  0.01  in Element Global on December 20, 2024 and sell it today you would earn a total of  0.00  from holding Element Global or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	96.72%
Values	Daily Returns

Pentair PLC  vs.  Element Global

Pentair PLC

Risk-Adjusted Performance

Very Weak

Over the last 90 days Pentair PLC has generated negative risk-adjusted returns adding no value to investors with long positions. Even with abnormal performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in April 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Element Global

Risk-Adjusted Performance

Very Weak

Over the last 90 days Element Global has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent technical and fundamental indicators, Element Global is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Pentair PLC and Element Global

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

The idea behind Pentair PLC and Element Global 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.