Correlation Between Roebuck Food and Pentair PLC

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

By analyzing existing cross correlation between Roebuck Food Group and Pentair PLC, you can compare the effects of market volatilities on Roebuck Food and Pentair PLC 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 Roebuck Food with a short position of Pentair PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Roebuck Food and Pentair PLC.

Diversification Opportunities for Roebuck Food and Pentair PLC

0.15

Correlation Coefficient

Roebuck Food  Pentair PLC

Average diversification

The 3 months correlation between Roebuck and Pentair is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Roebuck Food Group and Pentair PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pentair PLC and Roebuck Food 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 Roebuck Food Group are associated (or correlated) with Pentair PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pentair PLC has no effect on the direction of Roebuck Food i.e., Roebuck Food and Pentair PLC go up and down completely randomly.

Pair Corralation between Roebuck Food and Pentair PLC

Assuming the 90 days trading horizon Roebuck Food is expected to generate 2.8 times less return on investment than Pentair PLC. But when comparing it to its historical volatility, Roebuck Food Group is 4.06 times less risky than Pentair PLC. It trades about 0.07 of its potential returns per unit of risk. Pentair PLC is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  9,661  in Pentair PLC on October 8, 2024 and sell it today you would earn a total of  291.00  from holding Pentair PLC or generate 3.01% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.39%
Values	Daily Returns

Roebuck Food Group  vs.  Pentair PLC

Roebuck Food Group

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Roebuck Food Group are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound technical and fundamental indicators, Roebuck Food is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pentair PLC

Risk-Adjusted Performance

3 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Pentair PLC are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Pentair PLC is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Roebuck Food and Pentair PLC

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

The idea behind Roebuck Food Group and Pentair PLC 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.