Correlation Between Ingersoll Rand and Pentair PLC
Can any of the company-specific risk be diversified away by investing in both Ingersoll Rand 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 Ingersoll Rand and Pentair PLC into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ingersoll Rand and Pentair PLC, you can compare the effects of market volatilities on Ingersoll Rand 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 Ingersoll Rand with a short position of Pentair PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ingersoll Rand and Pentair PLC.
Diversification Opportunities for Ingersoll Rand and Pentair PLC
0.9 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Ingersoll and Pentair is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Ingersoll Rand and Pentair PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pentair PLC and Ingersoll Rand 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 Ingersoll Rand 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 Ingersoll Rand i.e., Ingersoll Rand and Pentair PLC go up and down completely randomly.
Pair Corralation between Ingersoll Rand and Pentair PLC
Allowing for the 90-day total investment horizon Ingersoll Rand is expected to generate 2.66 times less return on investment than Pentair PLC. In addition to that, Ingersoll Rand is 1.05 times more volatile than Pentair PLC. It trades about 0.05 of its total potential returns per unit of risk. Pentair PLC is currently generating about 0.14 per unit of volatility. If you would invest 7,854 in Pentair PLC on August 24, 2024 and sell it today you would earn a total of 2,751 from holding Pentair PLC or generate 35.03% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ingersoll Rand vs. Pentair PLC
Performance |
| Timeline |
| Ingersoll Rand |
| Pentair PLC |
Ingersoll Rand and Pentair PLC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ingersoll Rand and Pentair PLC
The main advantage of trading using opposite Ingersoll Rand and Pentair PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ingersoll Rand 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.| Ingersoll Rand vs. Small Cap Core | Ingersoll Rand vs. Freedom Holding Corp | Ingersoll Rand vs. Gfl Environmental Holdings | Ingersoll Rand vs. Growth Fund Of |
| Pentair PLC vs. Small Cap Core | Pentair PLC vs. Freedom Holding Corp | Pentair PLC vs. Gfl Environmental Holdings | Pentair PLC vs. Growth Fund Of |
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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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