Correlation Between Pentair PLC and Mulberry Group

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Can any of the company-specific risk be diversified away by investing in both Pentair PLC and Mulberry 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 Mulberry 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 Mulberry Group PLC, you can compare the effects of market volatilities on Pentair PLC and Mulberry 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 Mulberry Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pentair PLC and Mulberry Group.

Diversification Opportunities for Pentair PLC and Mulberry Group

-0.71
  Correlation Coefficient

Pay attention - limited upside

The 3 months correlation between Pentair and Mulberry is -0.71. Overlapping area represents the amount of risk that can be diversified away by holding Pentair PLC and Mulberry Group PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mulberry Group 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 Mulberry Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mulberry Group PLC has no effect on the direction of Pentair PLC i.e., Pentair PLC and Mulberry Group go up and down completely randomly.

Pair Corralation between Pentair PLC and Mulberry Group

Assuming the 90 days trading horizon Pentair PLC is expected to generate 0.51 times more return on investment than Mulberry Group. However, Pentair PLC is 1.97 times less risky than Mulberry Group. It trades about 0.09 of its potential returns per unit of risk. Mulberry Group PLC is currently generating about -0.03 per unit of risk. If you would invest  4,995  in Pentair PLC on October 11, 2024 and sell it today you would earn a total of  4,904  from holding Pentair PLC or generate 98.18% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthWeak
Accuracy97.33%
ValuesDaily Returns

Pentair PLC  vs.  Mulberry Group PLC

 Performance 
       Timeline  
Pentair PLC 

Risk-Adjusted Performance

2 of 100

 
Weak
 
Strong
Insignificant
Compared to the overall equity markets, risk-adjusted returns on investments in Pentair PLC are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Pentair PLC is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.
Mulberry Group PLC 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Mulberry Group PLC has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, Mulberry Group is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pentair PLC and Mulberry Group Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Pentair PLC and Mulberry Group

The main advantage of trading using opposite Pentair PLC and Mulberry Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pentair PLC position performs unexpectedly, Mulberry 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 Mulberry Group will offset losses from the drop in Mulberry Group's long position.
The idea behind Pentair PLC and Mulberry Group PLC pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.

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