Correlation Between AIR LIQUIDE and Pentair Plc
Can any of the company-specific risk be diversified away by investing in both AIR LIQUIDE and Pentair Plc 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 AIR LIQUIDE and Pentair Plc into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AIR LIQUIDE ADR and Pentair plc, you can compare the effects of market volatilities on AIR LIQUIDE and Pentair Plc 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 AIR LIQUIDE with a short position of Pentair Plc. Check out your portfolio center. Please also check ongoing floating volatility patterns of AIR LIQUIDE and Pentair Plc.
Diversification Opportunities for AIR LIQUIDE and Pentair Plc
-0.32 | Correlation Coefficient |
Very good diversification
The 3 months correlation between AIR and Pentair is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding AIR LIQUIDE ADR and Pentair plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pentair plc and AIR LIQUIDE 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 AIR LIQUIDE ADR are associated (or correlated) with Pentair Plc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pentair plc has no effect on the direction of AIR LIQUIDE i.e., AIR LIQUIDE and Pentair Plc go up and down completely randomly.
Pair Corralation between AIR LIQUIDE and Pentair Plc
Assuming the 90 days trading horizon AIR LIQUIDE ADR is expected to under-perform the Pentair Plc. But the stock apears to be less risky and, when comparing its historical volatility, AIR LIQUIDE ADR is 1.6 times less risky than Pentair Plc. The stock trades about -0.37 of its potential returns per unit of risk. The Pentair plc is currently generating about 0.29 of returns per unit of risk over similar time horizon. If you would invest 9,056 in Pentair plc on August 24, 2024 and sell it today you would earn a total of 834.00 from holding Pentair plc or generate 9.21% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
AIR LIQUIDE ADR vs. Pentair plc
Performance |
| Timeline |
| AIR LIQUIDE ADR |
| Pentair plc |
AIR LIQUIDE and Pentair Plc Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AIR LIQUIDE and Pentair Plc
The main advantage of trading using opposite AIR LIQUIDE and Pentair Plc positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AIR LIQUIDE position performs unexpectedly, Pentair Plc 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 Pentair Plc will offset losses from the drop in Pentair Plc's long position.| AIR LIQUIDE vs. Shin Etsu Chemical Co | AIR LIQUIDE vs. Sociedad Qumica y | AIR LIQUIDE vs. Superior Plus Corp | AIR LIQUIDE vs. NMI Holdings |
| Pentair Plc vs. Superior Plus Corp | Pentair Plc vs. NMI Holdings | Pentair Plc vs. Origin Agritech | Pentair Plc vs. SIVERS SEMICONDUCTORS AB |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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