Correlation Between Pentair PLC and Workspace Group
Can any of the company-specific risk be diversified away by investing in both Pentair PLC and Workspace 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 Workspace 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 Workspace Group PLC, you can compare the effects of market volatilities on Pentair PLC and Workspace 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 Workspace Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pentair PLC and Workspace Group.
Diversification Opportunities for Pentair PLC and Workspace Group
-0.86 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Pentair and Workspace is -0.86. Overlapping area represents the amount of risk that can be diversified away by holding Pentair PLC and Workspace Group PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Workspace 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 Workspace Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Workspace Group PLC has no effect on the direction of Pentair PLC i.e., Pentair PLC and Workspace Group go up and down completely randomly.
Pair Corralation between Pentair PLC and Workspace Group
Assuming the 90 days trading horizon Pentair PLC is expected to generate 0.97 times more return on investment than Workspace Group. However, Pentair PLC is 1.03 times less risky than Workspace Group. It trades about 0.11 of its potential returns per unit of risk. Workspace Group PLC is currently generating about 0.04 per unit of risk. If you would invest 4,473 in Pentair PLC on September 14, 2024 and sell it today you would earn a total of 6,337 from holding Pentair PLC or generate 141.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 94.37% |
| Values | Daily Returns |
Pentair PLC vs. Workspace Group PLC
Performance |
| Timeline |
| Pentair PLC |
| Workspace Group PLC |
Pentair PLC and Workspace Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pentair PLC and Workspace Group
The main advantage of trading using opposite Pentair PLC and Workspace Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pentair PLC position performs unexpectedly, Workspace 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 Workspace Group will offset losses from the drop in Workspace Group's long position.| Pentair PLC vs. Samsung Electronics Co | Pentair PLC vs. Samsung Electronics Co | Pentair PLC vs. Hyundai Motor | Pentair PLC vs. Reliance Industries Ltd |
| Workspace Group vs. Delta Air Lines | Workspace Group vs. Auto Trader Group | Workspace Group vs. Pentair PLC | Workspace Group vs. Vitec Software Group |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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