Correlation Between Pentair Plc and COVIVIO HOTELS

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

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

Diversification Opportunities for Pentair Plc and COVIVIO HOTELS

-0.76

Correlation Coefficient

Pentair Plc  COVIVIO HOTELS

Pay attention - limited upside

The 3 months correlation between Pentair and COVIVIO is -0.76. Overlapping area represents the amount of risk that can be diversified away by holding Pentair plc and COVIVIO HOTELS INH in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on COVIVIO HOTELS INH 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 COVIVIO HOTELS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of COVIVIO HOTELS INH has no effect on the direction of Pentair Plc i.e., Pentair Plc and COVIVIO HOTELS go up and down completely randomly.

Pair Corralation between Pentair Plc and COVIVIO HOTELS

Assuming the 90 days horizon Pentair plc is expected to under-perform the COVIVIO HOTELS. In addition to that, Pentair Plc is 1.01 times more volatile than COVIVIO HOTELS INH. It trades about -0.15 of its total potential returns per unit of risk. COVIVIO HOTELS INH is currently generating about 0.13 per unit of volatility. If you would invest  1,980  in COVIVIO HOTELS INH on December 30, 2024 and sell it today you would earn a total of  250.00  from holding COVIVIO HOTELS INH or generate 12.63% 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.  COVIVIO HOTELS INH

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 fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

COVIVIO HOTELS INH

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in COVIVIO HOTELS INH are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, COVIVIO HOTELS may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Pentair Plc and COVIVIO HOTELS

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

The idea behind Pentair plc and COVIVIO HOTELS INH 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.