Correlation Between Pentair PLC and Zedge

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

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

Diversification Opportunities for Pentair PLC and Zedge

-0.74

Correlation Coefficient

Pentair PLC  Zedge

Pay attention - limited upside

The 3 months correlation between Pentair and Zedge is -0.74. Overlapping area represents the amount of risk that can be diversified away by holding Pentair PLC and Zedge Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Zedge Inc 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 Zedge. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Zedge Inc has no effect on the direction of Pentair PLC i.e., Pentair PLC and Zedge go up and down completely randomly.

Pair Corralation between Pentair PLC and Zedge

Considering the 90-day investment horizon Pentair PLC is expected to under-perform the Zedge. But the stock apears to be less risky and, when comparing its historical volatility, Pentair PLC is 8.8 times less risky than Zedge. The stock trades about -0.21 of its potential returns per unit of risk. The Zedge Inc is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  264.00  in Zedge Inc on September 25, 2024 and sell it today you would earn a total of  0.00  from holding Zedge Inc or generate 0.0% return on investment over 90 days.

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

Pentair PLC  vs.  Zedge Inc

Pentair PLC

Risk-Adjusted Performance

7 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Pentair PLC are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Even with relatively unsteady basic indicators, Pentair PLC may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Zedge Inc

Risk-Adjusted Performance

0 of 100

Weak

Over the last 90 days Zedge Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest inconsistent performance, the Stock's technical and fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Pair Trading with Pentair PLC and Zedge

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

The idea behind Pentair PLC and Zedge Inc 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.