Correlation Between Pentair PLC and Sealed Air
Can any of the company-specific risk be diversified away by investing in both Pentair PLC and Sealed 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 Sealed 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 Sealed Air Corp, you can compare the effects of market volatilities on Pentair PLC and Sealed 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 Sealed Air. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pentair PLC and Sealed Air.
Diversification Opportunities for Pentair PLC and Sealed Air
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Pentair and Sealed is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Pentair PLC and Sealed Air Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sealed Air Corp 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 Sealed Air. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sealed Air Corp has no effect on the direction of Pentair PLC i.e., Pentair PLC and Sealed Air go up and down completely randomly.
Pair Corralation between Pentair PLC and Sealed Air
Assuming the 90 days trading horizon Pentair PLC is expected to generate 0.9 times more return on investment than Sealed Air. However, Pentair PLC is 1.11 times less risky than Sealed Air. It trades about 0.4 of its potential returns per unit of risk. Sealed Air Corp is currently generating about 0.0 per unit of risk. If you would invest 9,973 in Pentair PLC on August 31, 2024 and sell it today you would earn a total of 939.00 from holding Pentair PLC or generate 9.42% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Pentair PLC vs. Sealed Air Corp
Performance |
| Timeline |
| Pentair PLC |
| Sealed Air Corp |
Pentair PLC and Sealed Air Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pentair PLC and Sealed Air
The main advantage of trading using opposite Pentair PLC and Sealed Air positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pentair PLC position performs unexpectedly, Sealed 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 Sealed Air will offset losses from the drop in Sealed Air's long position.| Pentair PLC vs. Neometals | Pentair PLC vs. Coor Service Management | Pentair PLC vs. Aeorema Communications Plc | Pentair PLC vs. JLEN Environmental Assets |
| Sealed Air vs. Neometals | Sealed Air vs. Coor Service Management | Sealed Air vs. Aeorema Communications Plc | Sealed Air vs. JLEN Environmental Assets |
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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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