Correlation Between Pentair Plc and Calibre Mining

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

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

Diversification Opportunities for Pentair Plc and Calibre Mining

-0.58

Correlation Coefficient

Pentair Plc  Calibre Mining

Excellent diversification

The 3 months correlation between Pentair and Calibre is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding Pentair plc and Calibre Mining Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Calibre Mining Corp 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 Calibre Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Calibre Mining Corp has no effect on the direction of Pentair Plc i.e., Pentair Plc and Calibre Mining go up and down completely randomly.

Pair Corralation between Pentair Plc and Calibre Mining

Assuming the 90 days horizon Pentair plc is expected to generate 0.57 times more return on investment than Calibre Mining. However, Pentair plc is 1.77 times less risky than Calibre Mining. It trades about -0.17 of its potential returns per unit of risk. Calibre Mining Corp is currently generating about -0.2 per unit of risk. If you would invest  10,230  in Pentair plc on September 25, 2024 and sell it today you would lose (536.00) from holding Pentair plc or give up 5.24% of portfolio value over 90 days.

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

Pentair plc  vs.  Calibre Mining Corp

Pentair plc

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Pentair plc are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, Pentair Plc reported solid returns over the last few months and may actually be approaching a breakup point.

Calibre Mining Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Calibre Mining Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's technical and fundamental indicators remain rather sound which may send shares a bit higher in January 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Pentair Plc and Calibre Mining

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

The idea behind Pentair plc and Calibre Mining Corp 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.