Correlation Between Pentair PLC and Freeport

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

By analyzing existing cross correlation between Pentair PLC and Freeport McMoRan 4125 percent, you can compare the effects of market volatilities on Pentair PLC and Freeport 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 Freeport. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pentair PLC and Freeport.

Diversification Opportunities for Pentair PLC and Freeport

-0.07

Correlation Coefficient

Pentair PLC  Freeport

Good diversification

The 3 months correlation between Pentair and Freeport is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding Pentair PLC and Freeport McMoRan 4125 percent in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Freeport McMoRan 4125 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 Freeport. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Freeport McMoRan 4125 has no effect on the direction of Pentair PLC i.e., Pentair PLC and Freeport go up and down completely randomly.

Pair Corralation between Pentair PLC and Freeport

Considering the 90-day investment horizon Pentair PLC is expected to under-perform the Freeport. But the stock apears to be less risky and, when comparing its historical volatility, Pentair PLC is 1.08 times less risky than Freeport. The stock trades about -0.29 of its potential returns per unit of risk. The Freeport McMoRan 4125 percent is currently generating about -0.1 of returns per unit of risk over similar time horizon. If you would invest  9,807  in Freeport McMoRan 4125 percent on October 8, 2024 and sell it today you would lose (276.00) from holding Freeport McMoRan 4125 percent or give up 2.81% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.0%
Values	Daily Returns

Pentair PLC  vs.  Freeport McMoRan 4125 percent

Pentair PLC

Risk-Adjusted Performance

6 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Pentair PLC are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable basic indicators, Pentair PLC is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Freeport McMoRan 4125

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Freeport McMoRan 4125 percent has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Freeport is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Pentair PLC and Freeport

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

The idea behind Pentair PLC and Freeport McMoRan 4125 percent 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.