Correlation Between BCB Bancorp and Pentair PLC
Can any of the company-specific risk be diversified away by investing in both BCB Bancorp 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 BCB Bancorp and Pentair PLC into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BCB Bancorp and Pentair PLC, you can compare the effects of market volatilities on BCB Bancorp 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 BCB Bancorp with a short position of Pentair PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of BCB Bancorp and Pentair PLC.
Diversification Opportunities for BCB Bancorp and Pentair PLC
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between BCB and Pentair is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding BCB Bancorp and Pentair PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pentair PLC and BCB Bancorp 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 BCB Bancorp 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 BCB Bancorp i.e., BCB Bancorp and Pentair PLC go up and down completely randomly.
Pair Corralation between BCB Bancorp and Pentair PLC
Given the investment horizon of 90 days BCB Bancorp is expected to generate 2.07 times more return on investment than Pentair PLC. However, BCB Bancorp is 2.07 times more volatile than Pentair PLC. It trades about 0.2 of its potential returns per unit of risk. Pentair PLC is currently generating about 0.4 per unit of risk. If you would invest 1,186 in BCB Bancorp on September 5, 2024 and sell it today you would earn a total of 111.00 from holding BCB Bancorp or generate 9.36% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
BCB Bancorp vs. Pentair PLC
Performance |
| Timeline |
| BCB Bancorp |
| Pentair PLC |
BCB Bancorp and Pentair PLC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BCB Bancorp and Pentair PLC
The main advantage of trading using opposite BCB Bancorp and Pentair PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BCB Bancorp 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.| BCB Bancorp vs. Provident Financial Services | BCB Bancorp vs. First Mid Illinois | BCB Bancorp vs. ConnectOne Bancorp | BCB Bancorp vs. Finward Bancorp |
| Pentair PLC vs. Laser Photonics | Pentair PLC vs. Siemens AG Class | Pentair PLC vs. ATVRockN | Pentair PLC vs. Nuburu Inc |
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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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