Correlation Between Pentair PLC and TradeUP Acquisition

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

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

Diversification Opportunities for Pentair PLC and TradeUP Acquisition

0.21

Correlation Coefficient

Pentair PLC  TradeUP Acquisition

Modest diversification

The 3 months correlation between Pentair and TradeUP is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Pentair PLC and TradeUP Acquisition Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TradeUP Acquisition Corp 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 TradeUP Acquisition. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TradeUP Acquisition Corp has no effect on the direction of Pentair PLC i.e., Pentair PLC and TradeUP Acquisition go up and down completely randomly.

Pair Corralation between Pentair PLC and TradeUP Acquisition

If you would invest  9,273  in Pentair PLC on September 15, 2024 and sell it today you would earn a total of  1,443  from holding Pentair PLC or generate 15.56% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	1.56%
Values	Daily Returns

Pentair PLC  vs.  TradeUP Acquisition Corp

Pentair PLC

Risk-Adjusted Performance

20 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Pentair PLC are ranked lower than 20 (%) 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.

TradeUP Acquisition Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days TradeUP Acquisition Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable fundamental indicators, TradeUP Acquisition is not utilizing all of its potentials. The recent stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Pentair PLC and TradeUP Acquisition

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

The idea behind Pentair PLC and TradeUP Acquisition Corp 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..