Correlation Between Pentair PLC and 65339KBY5

Can any of the company-specific risk be diversified away by investing in both Pentair PLC and 65339KBY5 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 65339KBY5 into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Pentair PLC and NEE 1875 15 JAN 27, you can compare the effects of market volatilities on Pentair PLC and 65339KBY5 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 65339KBY5. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pentair PLC and 65339KBY5.

Diversification Opportunities for Pentair PLC and 65339KBY5

0.3

Correlation Coefficient

Pentair PLC  65339KBY5

Weak diversification

The 3 months correlation between Pentair and 65339KBY5 is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Pentair PLC and NEE 1875 15 JAN 27 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NEE 1875 15 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 65339KBY5. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NEE 1875 15 has no effect on the direction of Pentair PLC i.e., Pentair PLC and 65339KBY5 go up and down completely randomly.

Pair Corralation between Pentair PLC and 65339KBY5

Considering the 90-day investment horizon Pentair PLC is expected to generate 1.96 times more return on investment than 65339KBY5. However, Pentair PLC is 1.96 times more volatile than NEE 1875 15 JAN 27. It trades about 0.09 of its potential returns per unit of risk. NEE 1875 15 JAN 27 is currently generating about -0.12 per unit of risk. If you would invest  9,896  in Pentair PLC on October 25, 2024 and sell it today you would earn a total of  573.00  from holding Pentair PLC or generate 5.79% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.33%
Values	Daily Returns

Pentair PLC  vs.  NEE 1875 15 JAN 27

Pentair PLC

Risk-Adjusted Performance

6 of 100

Modest

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 abnormal basic indicators, Pentair PLC may actually be approaching a critical reversion point that can send shares even higher in February 2025.

NEE 1875 15

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days NEE 1875 15 JAN 27 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, 65339KBY5 is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Pentair PLC and 65339KBY5

The main advantage of trading using opposite Pentair PLC and 65339KBY5 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pentair PLC position performs unexpectedly, 65339KBY5 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 65339KBY5 will offset losses from the drop in 65339KBY5's long position.

The idea behind Pentair PLC and NEE 1875 15 JAN 27 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.