Correlation Between Axfood AB and Pentair PLC
Can any of the company-specific risk be diversified away by investing in both Axfood AB 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 Axfood AB and Pentair PLC into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Axfood AB and Pentair PLC, you can compare the effects of market volatilities on Axfood AB 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 Axfood AB with a short position of Pentair PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Axfood AB and Pentair PLC.
Diversification Opportunities for Axfood AB and Pentair PLC
0.1 | Correlation Coefficient |
Average diversification
The 3 months correlation between Axfood and Pentair is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding Axfood AB and Pentair PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pentair PLC and Axfood AB 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 Axfood AB 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 Axfood AB i.e., Axfood AB and Pentair PLC go up and down completely randomly.
Pair Corralation between Axfood AB and Pentair PLC
Assuming the 90 days trading horizon Axfood AB is expected to generate 1.87 times less return on investment than Pentair PLC. In addition to that, Axfood AB is 1.49 times more volatile than Pentair PLC. It trades about 0.05 of its total potential returns per unit of risk. Pentair PLC is currently generating about 0.15 per unit of volatility. If you would invest 10,085 in Pentair PLC on November 3, 2024 and sell it today you would earn a total of 333.00 from holding Pentair PLC or generate 3.3% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 91.3% |
| Values | Daily Returns |
Axfood AB vs. Pentair PLC
Performance |
| Timeline |
| Axfood AB |
| Pentair PLC |
Axfood AB and Pentair PLC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Axfood AB and Pentair PLC
The main advantage of trading using opposite Axfood AB and Pentair PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Axfood AB 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.| Axfood AB vs. Golden Metal Resources | Axfood AB vs. Host Hotels Resorts | Axfood AB vs. Endeavour Mining Corp | Axfood AB vs. Atalaya Mining |
| Pentair PLC vs. Zurich Insurance Group | Pentair PLC vs. Ecofin Global Utilities | Pentair PLC vs. Delta Air Lines | Pentair PLC vs. SBM Offshore NV |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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