Correlation Between Pentair PLC and Lendway

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

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

Diversification Opportunities for Pentair PLC and Lendway

0.28

Correlation Coefficient

Pentair PLC  Lendway

Modest diversification

The 3 months correlation between Pentair and Lendway is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding Pentair PLC and Lendway in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lendway 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 Lendway. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lendway has no effect on the direction of Pentair PLC i.e., Pentair PLC and Lendway go up and down completely randomly.

Pair Corralation between Pentair PLC and Lendway

Considering the 90-day investment horizon Pentair PLC is expected to generate 0.37 times more return on investment than Lendway. However, Pentair PLC is 2.7 times less risky than Lendway. It trades about 0.07 of its potential returns per unit of risk. Lendway is currently generating about 0.0 per unit of risk. If you would invest  6,762  in Pentair PLC on December 2, 2024 and sell it today you would earn a total of  2,658  from holding Pentair PLC or generate 39.31% return on investment over 90 days.

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

Pentair PLC  vs.  Lendway

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.

Lendway

Risk-Adjusted Performance

Very Weak

Over the last 90 days Lendway has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest fragile performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Pentair PLC and Lendway

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

The idea behind Pentair PLC and Lendway 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.