Correlation Between AB SKF and Pentair PLC
Can any of the company-specific risk be diversified away by investing in both AB SKF 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 AB SKF and Pentair PLC into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AB SKF B and Pentair PLC, you can compare the effects of market volatilities on AB SKF 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 AB SKF with a short position of Pentair PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of AB SKF and Pentair PLC.
Diversification Opportunities for AB SKF and Pentair PLC
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between 0NWX and Pentair is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding AB SKF B and Pentair PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pentair PLC and AB SKF 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 AB SKF B 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 AB SKF i.e., AB SKF and Pentair PLC go up and down completely randomly.
Pair Corralation between AB SKF and Pentair PLC
If you would invest 4,669 in Pentair PLC on September 4, 2024 and sell it today you would earn a total of 6,230 from holding Pentair PLC or generate 133.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 0.0% |
| Values | Daily Returns |
AB SKF B vs. Pentair PLC
Performance |
| Timeline |
| AB SKF B |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
OK
| Pentair PLC |
AB SKF and Pentair PLC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AB SKF and Pentair PLC
The main advantage of trading using opposite AB SKF and Pentair PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AB SKF 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.| AB SKF vs. Grieg Seafood | AB SKF vs. Auction Technology Group | AB SKF vs. Allianz Technology Trust | AB SKF vs. Hilton Food Group |
| Pentair PLC vs. Samsung Electronics Co | Pentair PLC vs. Samsung Electronics Co | Pentair PLC vs. Hyundai Motor | Pentair PLC vs. Toyota Motor Corp |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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