Correlation Between Pentair PLC and ACG Acquisition
Can any of the company-specific risk be diversified away by investing in both Pentair PLC and ACG Acquisition 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 ACG Acquisition into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Pentair PLC and ACG Acquisition Co, you can compare the effects of market volatilities on Pentair PLC and ACG Acquisition 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 ACG Acquisition. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pentair PLC and ACG Acquisition.
Diversification Opportunities for Pentair PLC and ACG Acquisition
-0.7 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Pentair and ACG is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding Pentair PLC and ACG Acquisition Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ACG Acquisition 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 ACG Acquisition. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ACG Acquisition has no effect on the direction of Pentair PLC i.e., Pentair PLC and ACG Acquisition go up and down completely randomly.
Pair Corralation between Pentair PLC and ACG Acquisition
Assuming the 90 days trading horizon Pentair PLC is expected to generate 52.13 times less return on investment than ACG Acquisition. But when comparing it to its historical volatility, Pentair PLC is 39.89 times less risky than ACG Acquisition. It trades about 0.04 of its potential returns per unit of risk. ACG Acquisition Co is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 1,650 in ACG Acquisition Co on December 2, 2024 and sell it today you would lose (1,095) from holding ACG Acquisition Co or give up 66.36% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 96.8% |
| Values | Daily Returns |
Pentair PLC vs. ACG Acquisition Co
Performance |
| Timeline |
| Pentair PLC |
| ACG Acquisition |
Pentair PLC and ACG Acquisition Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pentair PLC and ACG Acquisition
The main advantage of trading using opposite Pentair PLC and ACG Acquisition positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pentair PLC position performs unexpectedly, ACG Acquisition 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 ACG Acquisition will offset losses from the drop in ACG Acquisition's long position.| Pentair PLC vs. Cairo Communication SpA | Pentair PLC vs. Gaztransport et Technigaz | Pentair PLC vs. Lowland Investment Co | Pentair PLC vs. Zegona Communications Plc |
| ACG Acquisition vs. Southwest Airlines Co | ACG Acquisition vs. Central Asia Metals | ACG Acquisition vs. Critical Metals Plc | ACG Acquisition vs. Power Metal Resources |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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