Correlation Between Enerpac Tool and Pentair PLC
Can any of the company-specific risk be diversified away by investing in both Enerpac Tool 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 Enerpac Tool and Pentair PLC into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Enerpac Tool Group and Pentair PLC, you can compare the effects of market volatilities on Enerpac Tool 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 Enerpac Tool with a short position of Pentair PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Enerpac Tool and Pentair PLC.
Diversification Opportunities for Enerpac Tool and Pentair PLC
0.9 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Enerpac and Pentair is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Enerpac Tool Group and Pentair PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pentair PLC and Enerpac Tool 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 Enerpac Tool Group 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 Enerpac Tool i.e., Enerpac Tool and Pentair PLC go up and down completely randomly.
Pair Corralation between Enerpac Tool and Pentair PLC
Given the investment horizon of 90 days Enerpac Tool is expected to generate 1.1 times less return on investment than Pentair PLC. In addition to that, Enerpac Tool is 2.37 times more volatile than Pentair PLC. It trades about 0.16 of its total potential returns per unit of risk. Pentair PLC is currently generating about 0.43 per unit of volatility. If you would invest 9,910 in Pentair PLC on August 30, 2024 and sell it today you would earn a total of 1,001 from holding Pentair PLC or generate 10.1% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Enerpac Tool Group vs. Pentair PLC
Performance |
| Timeline |
| Enerpac Tool Group |
| Pentair PLC |
Enerpac Tool and Pentair PLC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Enerpac Tool and Pentair PLC
The main advantage of trading using opposite Enerpac Tool and Pentair PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Enerpac Tool 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.| Enerpac Tool vs. Illinois Tool Works | Enerpac Tool vs. Pentair PLC | Enerpac Tool vs. Emerson Electric | Enerpac Tool vs. Smith AO |
| Pentair PLC vs. Illinois Tool Works | Pentair PLC vs. Parker Hannifin | Pentair PLC vs. Emerson Electric | Pentair PLC vs. Smith AO |
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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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