Correlation Between Pentair Plc and MYFAIR GOLD

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

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

Diversification Opportunities for Pentair Plc and MYFAIR GOLD

-0.28

Correlation Coefficient

Pentair Plc  MYFAIR GOLD

Very good diversification

The 3 months correlation between Pentair and MYFAIR is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding Pentair plc and MYFAIR GOLD P in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MYFAIR GOLD P 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 MYFAIR GOLD. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MYFAIR GOLD P has no effect on the direction of Pentair Plc i.e., Pentair Plc and MYFAIR GOLD go up and down completely randomly.

Pair Corralation between Pentair Plc and MYFAIR GOLD

Assuming the 90 days horizon Pentair Plc is expected to generate 2.82 times less return on investment than MYFAIR GOLD. But when comparing it to its historical volatility, Pentair plc is 5.58 times less risky than MYFAIR GOLD. It trades about 0.21 of its potential returns per unit of risk. MYFAIR GOLD P is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  107.00  in MYFAIR GOLD P on September 20, 2024 and sell it today you would earn a total of  9.00  from holding MYFAIR GOLD P or generate 8.41% return on investment over 90 days.

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

Pentair plc  vs.  MYFAIR GOLD P

Pentair plc

Risk-Adjusted Performance

20 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Pentair plc are ranked lower than 20 (%) 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.

MYFAIR GOLD P

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in MYFAIR GOLD P are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, MYFAIR GOLD is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Pentair Plc and MYFAIR GOLD

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

The idea behind Pentair plc and MYFAIR GOLD P 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.