Correlation Between Pentair PLC and Nordson
Can any of the company-specific risk be diversified away by investing in both Pentair PLC and Nordson 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 Nordson into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Pentair PLC and Nordson, you can compare the effects of market volatilities on Pentair PLC and Nordson 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 Nordson. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pentair PLC and Nordson.
Diversification Opportunities for Pentair PLC and Nordson
0.48 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Pentair and Nordson is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Pentair PLC and Nordson in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nordson 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 Nordson. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nordson has no effect on the direction of Pentair PLC i.e., Pentair PLC and Nordson go up and down completely randomly.
Pair Corralation between Pentair PLC and Nordson
Considering the 90-day investment horizon Pentair PLC is expected to generate 0.86 times more return on investment than Nordson. However, Pentair PLC is 1.17 times less risky than Nordson. It trades about 0.35 of its potential returns per unit of risk. Nordson is currently generating about 0.05 per unit of risk. If you would invest 8,768 in Pentair PLC on September 11, 2024 and sell it today you would earn a total of 2,056 from holding Pentair PLC or generate 23.45% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Pentair PLC vs. Nordson
Performance |
Timeline |
Pentair PLC |
Nordson |
Pentair PLC and Nordson Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Pentair PLC and Nordson
The main advantage of trading using opposite Pentair PLC and Nordson positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pentair PLC position performs unexpectedly, Nordson 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 Nordson will offset losses from the drop in Nordson's long position.Pentair PLC vs. Illinois Tool Works | Pentair PLC vs. Parker Hannifin | Pentair PLC vs. Emerson Electric | Pentair PLC vs. Smith AO |
Nordson vs. Illinois Tool Works | Nordson vs. Pentair PLC | Nordson vs. Parker Hannifin | Nordson vs. Emerson Electric |
Check out your portfolio center.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.
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