Correlation Between Pentair PLC and SoftBank Group
Can any of the company-specific risk be diversified away by investing in both Pentair PLC and SoftBank Group 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 SoftBank Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Pentair PLC and SoftBank Group Corp, you can compare the effects of market volatilities on Pentair PLC and SoftBank Group 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 SoftBank Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pentair PLC and SoftBank Group.
Diversification Opportunities for Pentair PLC and SoftBank Group
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Pentair and SoftBank is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Pentair PLC and SoftBank Group Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SoftBank Group 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 SoftBank Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SoftBank Group Corp has no effect on the direction of Pentair PLC i.e., Pentair PLC and SoftBank Group go up and down completely randomly.
Pair Corralation between Pentair PLC and SoftBank Group
Assuming the 90 days trading horizon Pentair PLC is expected to generate 0.67 times more return on investment than SoftBank Group. However, Pentair PLC is 1.49 times less risky than SoftBank Group. It trades about 0.1 of its potential returns per unit of risk. SoftBank Group Corp is currently generating about 0.05 per unit of risk. If you would invest 4,504 in Pentair PLC on September 23, 2024 and sell it today you would earn a total of 5,584 from holding Pentair PLC or generate 123.98% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 86.71% |
| Values | Daily Returns |
Pentair PLC vs. SoftBank Group Corp
Performance |
| Timeline |
| Pentair PLC |
| SoftBank Group Corp |
Pentair PLC and SoftBank Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pentair PLC and SoftBank Group
The main advantage of trading using opposite Pentair PLC and SoftBank Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pentair PLC position performs unexpectedly, SoftBank Group 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 SoftBank Group will offset losses from the drop in SoftBank Group's long position.| Pentair PLC vs. LBG Media PLC | Pentair PLC vs. Live Nation Entertainment | Pentair PLC vs. Catalyst Media Group | Pentair PLC vs. Zegona Communications Plc |
| SoftBank Group vs. Pentair PLC | SoftBank Group vs. Finnair Oyj | SoftBank Group vs. Fair Oaks Income | SoftBank Group vs. Solstad Offshore ASA |
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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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