Correlation Between Commerzbank and Pentair PLC
Can any of the company-specific risk be diversified away by investing in both Commerzbank 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 Commerzbank and Pentair PLC into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Commerzbank AG and Pentair PLC, you can compare the effects of market volatilities on Commerzbank 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 Commerzbank with a short position of Pentair PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Commerzbank and Pentair PLC.
Diversification Opportunities for Commerzbank and Pentair PLC
-0.45 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Commerzbank and Pentair is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding Commerzbank AG and Pentair PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pentair PLC and Commerzbank 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 Commerzbank AG 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 Commerzbank i.e., Commerzbank and Pentair PLC go up and down completely randomly.
Pair Corralation between Commerzbank and Pentair PLC
Assuming the 90 days trading horizon Commerzbank AG is expected to generate 1.02 times more return on investment than Pentair PLC. However, Commerzbank is 1.02 times more volatile than Pentair PLC. It trades about 0.73 of its potential returns per unit of risk. Pentair PLC is currently generating about 0.15 per unit of risk. If you would invest 1,550 in Commerzbank AG on November 3, 2024 and sell it today you would earn a total of 313.00 from holding Commerzbank AG or generate 20.19% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 91.3% |
| Values | Daily Returns |
Commerzbank AG vs. Pentair PLC
Performance |
| Timeline |
| Commerzbank AG |
| Pentair PLC |
Commerzbank and Pentair PLC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Commerzbank and Pentair PLC
The main advantage of trading using opposite Commerzbank and Pentair PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Commerzbank 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.| Commerzbank vs. Samsung Electronics Co | Commerzbank vs. Samsung Electronics Co | Commerzbank vs. Toyota Motor Corp | Commerzbank vs. Reliance Industries Ltd |
| 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
Other Complementary Tools
| Alpha Finder Use alpha and beta coefficients to find investment opportunities after accounting for the risk | |
| Portfolio Optimization Compute new portfolio that will generate highest expected return given your specified tolerance for risk | |
| Portfolio Comparator Compare the composition, asset allocations and performance of any two portfolios in your account | |
| Portfolio File Import Quickly import all of your third-party portfolios from your local drive in csv format | |
| Top Crypto Exchanges Search and analyze digital assets across top global cryptocurrency exchanges |