Correlation Between Zedge and Pentair PLC

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

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

Diversification Opportunities for Zedge and Pentair PLC

-0.74

Correlation Coefficient

Zedge  Pentair PLC

Pay attention - limited upside

The 3 months correlation between Zedge and Pentair is -0.74. Overlapping area represents the amount of risk that can be diversified away by holding Zedge Inc and Pentair PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pentair PLC and Zedge 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 Zedge Inc 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 Zedge i.e., Zedge and Pentair PLC go up and down completely randomly.

Pair Corralation between Zedge and Pentair PLC

Given the investment horizon of 90 days Zedge Inc is expected to generate 8.8 times more return on investment than Pentair PLC. However, Zedge is 8.8 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  264.00  in Zedge Inc on September 25, 2024 and sell it today you would earn a total of  0.00  from holding Zedge Inc or generate 0.0% return on investment over 90 days.

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

Zedge Inc  vs.  Pentair PLC

Zedge Inc

Risk-Adjusted Performance

0 of 100

Weak

Over the last 90 days Zedge Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest inconsistent performance, the Stock's technical and fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Pentair PLC

Risk-Adjusted Performance

7 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Pentair PLC are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Even with relatively unsteady basic indicators, Pentair PLC may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Zedge and Pentair PLC

The main advantage of trading using opposite Zedge and Pentair PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Zedge 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 Zedge Inc 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.