Correlation Between Pentair Plc and International Game

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Can any of the company-specific risk be diversified away by investing in both Pentair Plc and International Game 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 International Game into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Pentair plc and International Game Technology, you can compare the effects of market volatilities on Pentair Plc and International Game 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 International Game. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pentair Plc and International Game.

Diversification Opportunities for Pentair Plc and International Game

PentairInternationalDiversified AwayPentairInternationalDiversified Away100%
0.65
  Correlation Coefficient

Poor diversification

The 3 months correlation between Pentair and International is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Pentair plc and International Game Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on International Game 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 International Game. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of International Game has no effect on the direction of Pentair Plc i.e., Pentair Plc and International Game go up and down completely randomly.

Pair Corralation between Pentair Plc and International Game

Assuming the 90 days horizon Pentair plc is expected to generate 0.72 times more return on investment than International Game. However, Pentair plc is 1.39 times less risky than International Game. It trades about -0.09 of its potential returns per unit of risk. International Game Technology is currently generating about -0.09 per unit of risk. If you would invest  10,015  in Pentair plc on November 18, 2024 and sell it today you would lose (749.00) from holding Pentair plc or give up 7.48% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

Pentair plc  vs.  International Game Technology

 Performance 
JavaScript chart by amCharts 3.21.15Dec2025Feb -15-10-50510
JavaScript chart by amCharts 3.21.15PNT 7IG
       Timeline  
Pentair plc 

Risk-Adjusted Performance

Very Weak

 
Weak
 
Strong
Over the last 90 days Pentair plc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile 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.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb949698100102104
International Game 

Risk-Adjusted Performance

Very Weak

 
Weak
 
Strong
Over the last 90 days International Game Technology has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unsteady 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.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb1616.51717.51818.519

Pentair Plc and International Game Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-2.21-1.66-1.11-0.56-0.02770.511.061.612.16 0.080.100.120.140.160.180.20
JavaScript chart by amCharts 3.21.15PNT 7IG
       Returns  

Pair Trading with Pentair Plc and International Game

The main advantage of trading using opposite Pentair Plc and International Game positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pentair Plc position performs unexpectedly, International Game 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 International Game will offset losses from the drop in International Game's long position.
The idea behind Pentair plc and International Game Technology 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..

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