Correlation Between Grupo Simec and Pentair PLC
Can any of the company-specific risk be diversified away by investing in both Grupo Simec 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 Grupo Simec and Pentair PLC into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Grupo Simec SAB and Pentair PLC, you can compare the effects of market volatilities on Grupo Simec 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 Grupo Simec with a short position of Pentair PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Grupo Simec and Pentair PLC.
Diversification Opportunities for Grupo Simec and Pentair PLC
-0.57 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Grupo and Pentair is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding Grupo Simec SAB and Pentair PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pentair PLC and Grupo Simec 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 Grupo Simec SAB 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 Grupo Simec i.e., Grupo Simec and Pentair PLC go up and down completely randomly.
Pair Corralation between Grupo Simec and Pentair PLC
Considering the 90-day investment horizon Grupo Simec SAB is expected to generate 1.95 times more return on investment than Pentair PLC. However, Grupo Simec is 1.95 times more volatile than Pentair PLC. It trades about 0.05 of its potential returns per unit of risk. Pentair PLC is currently generating about -0.21 per unit of risk. If you would invest 2,577 in Grupo Simec SAB on September 25, 2024 and sell it today you would earn a total of 43.00 from holding Grupo Simec SAB or generate 1.67% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Grupo Simec SAB vs. Pentair PLC
Performance |
Timeline |
Grupo Simec SAB |
Pentair PLC |
Grupo Simec and Pentair PLC Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Grupo Simec and Pentair PLC
The main advantage of trading using opposite Grupo Simec and Pentair PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Grupo Simec 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.Grupo Simec vs. Synalloy | Grupo Simec vs. Mesabi Trust | Grupo Simec vs. Algoma Steel Group | Grupo Simec vs. Olympic Steel |
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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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