Correlation Between Federal Home and Pentair PLC
Can any of the company-specific risk be diversified away by investing in both Federal Home 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 Federal Home and Pentair PLC into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Federal Home 530 and Pentair PLC, you can compare the effects of market volatilities on Federal Home 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 Federal Home with a short position of Pentair PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Federal Home and Pentair PLC.
Diversification Opportunities for Federal Home and Pentair PLC
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Federal and Pentair is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Federal Home 530 and Pentair PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pentair PLC and Federal Home 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 Federal Home 530 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 Federal Home i.e., Federal Home and Pentair PLC go up and down completely randomly.
Pair Corralation between Federal Home and Pentair PLC
Assuming the 90 days horizon Federal Home 530 is expected to generate 3.05 times more return on investment than Pentair PLC. However, Federal Home is 3.05 times more volatile than Pentair PLC. It trades about 0.08 of its potential returns per unit of risk. Pentair PLC is currently generating about 0.12 per unit of risk. If you would invest 375.00 in Federal Home 530 on September 12, 2024 and sell it today you would earn a total of 1,278 from holding Federal Home 530 or generate 340.8% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 99.8% |
| Values | Daily Returns |
Federal Home 530 vs. Pentair PLC
Performance |
| Timeline |
| Federal Home 530 |
| Pentair PLC |
Federal Home and Pentair PLC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Federal Home and Pentair PLC
The main advantage of trading using opposite Federal Home and Pentair PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Federal Home 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.| Federal Home vs. Sonos Inc | Federal Home vs. Jabil Circuit | Federal Home vs. Verde Clean Fuels | Federal Home vs. Transportadora de Gas |
| 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.
Other Complementary Tools
| My Watchlist Analysis Analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like | |
| Idea Breakdown Analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes | |
| Cryptocurrency Center Build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency | |
| Portfolio File Import Quickly import all of your third-party portfolios from your local drive in csv format | |
| Global Correlations Find global opportunities by holding instruments from different markets |