Correlation Between Sinclair Broadcast and Pentair PLC

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

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

Diversification Opportunities for Sinclair Broadcast and Pentair PLC

0.49

Correlation Coefficient

Sinclair Broadcast  Pentair PLC

Very weak diversification

The 3 months correlation between Sinclair and Pentair is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Sinclair Broadcast Group and Pentair PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pentair PLC and Sinclair Broadcast 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 Sinclair Broadcast 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 Sinclair Broadcast i.e., Sinclair Broadcast and Pentair PLC go up and down completely randomly.

Pair Corralation between Sinclair Broadcast and Pentair PLC

Given the investment horizon of 90 days Sinclair Broadcast Group is expected to generate 2.29 times more return on investment than Pentair PLC. However, Sinclair Broadcast is 2.29 times more volatile than Pentair PLC. It trades about 0.03 of its potential returns per unit of risk. Pentair PLC is currently generating about 0.05 per unit of risk. If you would invest  1,637  in Sinclair Broadcast Group on October 9, 2024 and sell it today you would earn a total of  42.00  from holding Sinclair Broadcast Group or generate 2.57% return on investment over 90 days.

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

Sinclair Broadcast Group  vs.  Pentair PLC

Sinclair Broadcast

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Sinclair Broadcast Group are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong technical and fundamental indicators, Sinclair Broadcast is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

Pentair PLC

Risk-Adjusted Performance

3 of 100

Insignificant

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. Even with relatively invariable basic indicators, Pentair PLC is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Sinclair Broadcast and Pentair PLC

The main advantage of trading using opposite Sinclair Broadcast and Pentair PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sinclair Broadcast 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 Sinclair Broadcast 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.

Check out your portfolio center.

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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.