Correlation Between Pentair PLC and Norwegian Air
Can any of the company-specific risk be diversified away by investing in both Pentair PLC and Norwegian Air 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 Pentair PLC and Norwegian Air into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Pentair PLC and Norwegian Air Shuttle, you can compare the effects of market volatilities on Pentair PLC and Norwegian Air 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 Pentair PLC with a short position of Norwegian Air. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pentair PLC and Norwegian Air.
Diversification Opportunities for Pentair PLC and Norwegian Air
0.49 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Pentair and Norwegian is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Pentair PLC and Norwegian Air Shuttle in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Norwegian Air Shuttle and Pentair PLC 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 Pentair PLC are associated (or correlated) with Norwegian Air. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Norwegian Air Shuttle has no effect on the direction of Pentair PLC i.e., Pentair PLC and Norwegian Air go up and down completely randomly.
Pair Corralation between Pentair PLC and Norwegian Air
Assuming the 90 days trading horizon Pentair PLC is expected to generate 0.53 times more return on investment than Norwegian Air. However, Pentair PLC is 1.87 times less risky than Norwegian Air. It trades about -0.08 of its potential returns per unit of risk. Norwegian Air Shuttle is currently generating about -0.06 per unit of risk. If you would invest 10,860 in Pentair PLC on October 26, 2024 and sell it today you would lose (398.00) from holding Pentair PLC or give up 3.66% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 92.68% |
| Values | Daily Returns |
Pentair PLC vs. Norwegian Air Shuttle
Performance |
| Timeline |
| Pentair PLC |
| Norwegian Air Shuttle |
Pentair PLC and Norwegian Air Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pentair PLC and Norwegian Air
The main advantage of trading using opposite Pentair PLC and Norwegian Air positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pentair PLC position performs unexpectedly, Norwegian Air 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 Norwegian Air will offset losses from the drop in Norwegian Air's long position.| Pentair PLC vs. Berkshire Hathaway | Pentair PLC vs. Samsung Electronics Co | Pentair PLC vs. Samsung Electronics Co | Pentair PLC vs. Chocoladefabriken Lindt Spruengli |
| Norwegian Air vs. Zoom Video Communications | Norwegian Air vs. Compal Electronics GDR | Norwegian Air vs. mobilezone holding AG | Norwegian Air vs. Universal Music Group |
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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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