Correlation Between Pentair PLC and CleanTech Lithium
Can any of the company-specific risk be diversified away by investing in both Pentair PLC and CleanTech Lithium 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 CleanTech Lithium into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Pentair PLC and CleanTech Lithium plc, you can compare the effects of market volatilities on Pentair PLC and CleanTech Lithium 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 CleanTech Lithium. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pentair PLC and CleanTech Lithium.
Diversification Opportunities for Pentair PLC and CleanTech Lithium
0.25 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Pentair and CleanTech is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Pentair PLC and CleanTech Lithium plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CleanTech Lithium plc 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 CleanTech Lithium. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CleanTech Lithium plc has no effect on the direction of Pentair PLC i.e., Pentair PLC and CleanTech Lithium go up and down completely randomly.
Pair Corralation between Pentair PLC and CleanTech Lithium
Assuming the 90 days trading horizon Pentair PLC is expected to generate 0.36 times more return on investment than CleanTech Lithium. However, Pentair PLC is 2.81 times less risky than CleanTech Lithium. It trades about 0.12 of its potential returns per unit of risk. CleanTech Lithium plc is currently generating about -0.25 per unit of risk. If you would invest 10,135 in Pentair PLC on October 24, 2024 and sell it today you would earn a total of 214.00 from holding Pentair PLC or generate 2.11% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 89.47% |
| Values | Daily Returns |
Pentair PLC vs. CleanTech Lithium plc
Performance |
| Timeline |
| Pentair PLC |
| CleanTech Lithium plc |
Pentair PLC and CleanTech Lithium Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pentair PLC and CleanTech Lithium
The main advantage of trading using opposite Pentair PLC and CleanTech Lithium positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pentair PLC position performs unexpectedly, CleanTech Lithium 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 CleanTech Lithium will offset losses from the drop in CleanTech Lithium's long position.| Pentair PLC vs. Commerzbank AG | Pentair PLC vs. Erste Group Bank | Pentair PLC vs. Ameriprise Financial | Pentair PLC vs. Europa Metals |
| CleanTech Lithium vs. Atalaya Mining | CleanTech Lithium vs. Charter Communications Cl | CleanTech Lithium vs. mobilezone holding AG | CleanTech Lithium vs. Silvercorp Metals |
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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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