Correlation Between Pentair Plc and SYSTEMAIR

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

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

Diversification Opportunities for Pentair Plc and SYSTEMAIR

0.14

Correlation Coefficient

Pentair Plc  SYSTEMAIR

Average diversification

The 3 months correlation between Pentair and SYSTEMAIR is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding Pentair plc and SYSTEMAIR AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SYSTEMAIR AB 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 SYSTEMAIR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SYSTEMAIR AB has no effect on the direction of Pentair Plc i.e., Pentair Plc and SYSTEMAIR go up and down completely randomly.

Pair Corralation between Pentair Plc and SYSTEMAIR

Assuming the 90 days horizon Pentair plc is expected to under-perform the SYSTEMAIR. But the stock apears to be less risky and, when comparing its historical volatility, Pentair plc is 1.29 times less risky than SYSTEMAIR. The stock trades about -0.16 of its potential returns per unit of risk. The SYSTEMAIR AB is currently generating about -0.06 of returns per unit of risk over similar time horizon. If you would invest  769.00  in SYSTEMAIR AB on December 31, 2024 and sell it today you would lose (62.00) from holding SYSTEMAIR AB or give up 8.06% of portfolio value over 90 days.

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

Pentair plc  vs.  SYSTEMAIR AB

Pentair plc

Risk-Adjusted Performance

Very Weak

Over the last 90 days Pentair plc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in May 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

SYSTEMAIR AB

Risk-Adjusted Performance

Very Weak

Over the last 90 days SYSTEMAIR AB has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest uncertain performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with Pentair Plc and SYSTEMAIR

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

The idea behind Pentair plc and SYSTEMAIR AB 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.