Correlation Between CVR Energy and Pentair PLC
Can any of the company-specific risk be diversified away by investing in both CVR Energy 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 CVR Energy and Pentair PLC into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CVR Energy and Pentair PLC, you can compare the effects of market volatilities on CVR Energy 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 CVR Energy with a short position of Pentair PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of CVR Energy and Pentair PLC.
Diversification Opportunities for CVR Energy and Pentair PLC
-0.58 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between CVR and Pentair is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding CVR Energy and Pentair PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pentair PLC and CVR Energy 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 CVR Energy 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 CVR Energy i.e., CVR Energy and Pentair PLC go up and down completely randomly.
Pair Corralation between CVR Energy and Pentair PLC
Assuming the 90 days trading horizon CVR Energy is expected to under-perform the Pentair PLC. In addition to that, CVR Energy is 1.71 times more volatile than Pentair PLC. It trades about -0.02 of its total potential returns per unit of risk. Pentair PLC is currently generating about 0.11 per unit of volatility. If you would invest 4,432 in Pentair PLC on August 24, 2024 and sell it today you would earn a total of 6,194 from holding Pentair PLC or generate 139.76% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 90.77% |
| Values | Daily Returns |
CVR Energy vs. Pentair PLC
Performance |
| Timeline |
| CVR Energy |
| Pentair PLC |
CVR Energy and Pentair PLC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CVR Energy and Pentair PLC
The main advantage of trading using opposite CVR Energy and Pentair PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CVR Energy 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.| CVR Energy vs. Eastman Chemical Co | CVR Energy vs. Gaztransport et Technigaz | CVR Energy vs. Auto Trader Group | CVR Energy vs. Concurrent Technologies Plc |
| Pentair PLC vs. Datalogic | Pentair PLC vs. Ion Beam Applications | Pentair PLC vs. Metals Exploration Plc | Pentair PLC vs. Anglesey Mining |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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