Correlation Between Pentair PLC and Gerresheimer
Can any of the company-specific risk be diversified away by investing in both Pentair PLC and Gerresheimer 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 Gerresheimer into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Pentair PLC and Gerresheimer AG, you can compare the effects of market volatilities on Pentair PLC and Gerresheimer 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 Gerresheimer. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pentair PLC and Gerresheimer.
Diversification Opportunities for Pentair PLC and Gerresheimer
-0.87 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Pentair and Gerresheimer is -0.87. Overlapping area represents the amount of risk that can be diversified away by holding Pentair PLC and Gerresheimer AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gerresheimer 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 Gerresheimer. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gerresheimer AG has no effect on the direction of Pentair PLC i.e., Pentair PLC and Gerresheimer go up and down completely randomly.
Pair Corralation between Pentair PLC and Gerresheimer
Assuming the 90 days trading horizon Pentair PLC is expected to generate 0.47 times more return on investment than Gerresheimer. However, Pentair PLC is 2.11 times less risky than Gerresheimer. It trades about 0.3 of its potential returns per unit of risk. Gerresheimer AG is currently generating about -0.18 per unit of risk. If you would invest 8,650 in Pentair PLC on September 2, 2024 and sell it today you would earn a total of 2,249 from holding Pentair PLC or generate 26.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 96.97% |
| Values | Daily Returns |
Pentair PLC vs. Gerresheimer AG
Performance |
| Timeline |
| Pentair PLC |
| Gerresheimer AG |
Pentair PLC and Gerresheimer Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pentair PLC and Gerresheimer
The main advantage of trading using opposite Pentair PLC and Gerresheimer positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pentair PLC position performs unexpectedly, Gerresheimer 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 Gerresheimer will offset losses from the drop in Gerresheimer's long position.| Pentair PLC vs. Ecclesiastical Insurance Office | Pentair PLC vs. Vitec Software Group | Pentair PLC vs. Veolia Environnement VE | Pentair PLC vs. MTI Wireless Edge |
| Gerresheimer vs. GreenX Metals | Gerresheimer vs. Metals Exploration Plc | Gerresheimer vs. Endeavour Mining Corp | Gerresheimer vs. Optima Health plc |
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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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