Correlation Between Pentair PLC and Glacier Bancorp

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

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

Diversification Opportunities for Pentair PLC and Glacier Bancorp

0.86

Correlation Coefficient

Pentair PLC  Glacier Bancorp

Very poor diversification

The 3 months correlation between Pentair and Glacier is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Pentair PLC and Glacier Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Glacier Bancorp 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 Glacier Bancorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Glacier Bancorp has no effect on the direction of Pentair PLC i.e., Pentair PLC and Glacier Bancorp go up and down completely randomly.

Pair Corralation between Pentair PLC and Glacier Bancorp

Considering the 90-day investment horizon Pentair PLC is expected to generate 1.01 times less return on investment than Glacier Bancorp. But when comparing it to its historical volatility, Pentair PLC is 2.43 times less risky than Glacier Bancorp. It trades about 0.38 of its potential returns per unit of risk. Glacier Bancorp is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest  4,641  in Glacier Bancorp on September 3, 2024 and sell it today you would earn a total of  1,148  from holding Glacier Bancorp or generate 24.74% return on investment over 90 days.

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

Pentair PLC  vs.  Glacier Bancorp

Pentair PLC

Risk-Adjusted Performance

29 of 100

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Pentair PLC are ranked lower than 29 (%) of all global equities and portfolios over the last 90 days. Even with relatively abnormal basic indicators, Pentair PLC reported solid returns over the last few months and may actually be approaching a breakup point.

Glacier Bancorp

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Glacier Bancorp are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite fairly fragile fundamental indicators, Glacier Bancorp demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Pentair PLC and Glacier Bancorp

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

The idea behind Pentair PLC and Glacier Bancorp 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.