Correlation Between Pentair PLC and United Internet
Can any of the company-specific risk be diversified away by investing in both Pentair PLC and United Internet 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 United Internet into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Pentair PLC and United Internet AG, you can compare the effects of market volatilities on Pentair PLC and United Internet 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 United Internet. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pentair PLC and United Internet.
Diversification Opportunities for Pentair PLC and United Internet
-0.26 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Pentair and United is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding Pentair PLC and United Internet AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on United Internet AG 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 United Internet. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of United Internet AG has no effect on the direction of Pentair PLC i.e., Pentair PLC and United Internet go up and down completely randomly.
Pair Corralation between Pentair PLC and United Internet
Assuming the 90 days trading horizon Pentair PLC is expected to generate 1.01 times less return on investment than United Internet. But when comparing it to its historical volatility, Pentair PLC is 1.21 times less risky than United Internet. It trades about 0.12 of its potential returns per unit of risk. United Internet AG is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 1,501 in United Internet AG on October 24, 2024 and sell it today you would earn a total of 35.00 from holding United Internet AG or generate 2.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 89.47% |
| Values | Daily Returns |
Pentair PLC vs. United Internet AG
Performance |
| Timeline |
| Pentair PLC |
| United Internet AG |
Pentair PLC and United Internet Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pentair PLC and United Internet
The main advantage of trading using opposite Pentair PLC and United Internet positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pentair PLC position performs unexpectedly, United Internet 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 United Internet will offset losses from the drop in United Internet's long position.| Pentair PLC vs. Commerzbank AG | Pentair PLC vs. Erste Group Bank | Pentair PLC vs. Ameriprise Financial | Pentair PLC vs. Europa Metals |
| United Internet vs. Allianz Technology Trust | United Internet vs. Cognizant Technology Solutions | United Internet vs. Accesso Technology Group | United Internet vs. Take Two Interactive Software |
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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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