Correlation Between Pentair Plc and 24SEVENOFFICE GROUP

Can any of the company-specific risk be diversified away by investing in both Pentair Plc and 24SEVENOFFICE GROUP 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 24SEVENOFFICE GROUP into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Pentair plc and 24SEVENOFFICE GROUP AB, you can compare the effects of market volatilities on Pentair Plc and 24SEVENOFFICE GROUP 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 24SEVENOFFICE GROUP. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pentair Plc and 24SEVENOFFICE GROUP.

Diversification Opportunities for Pentair Plc and 24SEVENOFFICE GROUP

0.63

Correlation Coefficient

Pentair Plc  24SEVENOFFICE GROUP

Poor diversification

The 3 months correlation between Pentair and 24SEVENOFFICE is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Pentair plc and 24SEVENOFFICE GROUP AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on 24SEVENOFFICE GROUP 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 24SEVENOFFICE GROUP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of 24SEVENOFFICE GROUP has no effect on the direction of Pentair Plc i.e., Pentair Plc and 24SEVENOFFICE GROUP go up and down completely randomly.

Pair Corralation between Pentair Plc and 24SEVENOFFICE GROUP

Assuming the 90 days horizon Pentair Plc is expected to generate 2.0 times less return on investment than 24SEVENOFFICE GROUP. But when comparing it to its historical volatility, Pentair plc is 2.28 times less risky than 24SEVENOFFICE GROUP. It trades about 0.12 of its potential returns per unit of risk. 24SEVENOFFICE GROUP AB is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  85.00  in 24SEVENOFFICE GROUP AB on September 13, 2024 and sell it today you would earn a total of  111.00  from holding 24SEVENOFFICE GROUP AB or generate 130.59% return on investment over 90 days.

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

Pentair plc  vs.  24SEVENOFFICE GROUP AB

Pentair plc

Risk-Adjusted Performance

24 of 100

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Pentair plc are ranked lower than 24 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Pentair Plc reported solid returns over the last few months and may actually be approaching a breakup point.

24SEVENOFFICE GROUP

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in 24SEVENOFFICE GROUP AB are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, 24SEVENOFFICE GROUP reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Pentair Plc and 24SEVENOFFICE GROUP

The main advantage of trading using opposite Pentair Plc and 24SEVENOFFICE GROUP positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pentair Plc position performs unexpectedly, 24SEVENOFFICE GROUP 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 24SEVENOFFICE GROUP will offset losses from the drop in 24SEVENOFFICE GROUP's long position.

The idea behind Pentair plc and 24SEVENOFFICE GROUP 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.