Correlation Between John Bean and Pentair PLC
Can any of the company-specific risk be diversified away by investing in both John Bean 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 John Bean and Pentair PLC into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between John Bean Technologies and Pentair PLC, you can compare the effects of market volatilities on John Bean 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 John Bean with a short position of Pentair PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of John Bean and Pentair PLC.
Diversification Opportunities for John Bean and Pentair PLC
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between John and Pentair is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding John Bean Technologies and Pentair PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pentair PLC and John Bean 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 John Bean Technologies 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 John Bean i.e., John Bean and Pentair PLC go up and down completely randomly.
Pair Corralation between John Bean and Pentair PLC
Considering the 90-day investment horizon John Bean is expected to generate 2.2 times less return on investment than Pentair PLC. In addition to that, John Bean is 1.29 times more volatile than Pentair PLC. It trades about 0.04 of its total potential returns per unit of risk. Pentair PLC is currently generating about 0.12 per unit of volatility. If you would invest 4,388 in Pentair PLC on August 30, 2024 and sell it today you would earn a total of 6,523 from holding Pentair PLC or generate 148.66% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 99.8% |
| Values | Daily Returns |
John Bean Technologies vs. Pentair PLC
Performance |
| Timeline |
| John Bean Technologies |
| Pentair PLC |
John Bean and Pentair PLC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with John Bean and Pentair PLC
The main advantage of trading using opposite John Bean and Pentair PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if John Bean 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.| John Bean vs. Illinois Tool Works | John Bean vs. Pentair PLC | John Bean vs. Emerson Electric | John Bean 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
Other Complementary Tools
| Global Correlations Find global opportunities by holding instruments from different markets | |
| Portfolio Center All portfolio management and optimization tools to improve performance of your portfolios | |
| Money Flow Index Determine momentum by analyzing Money Flow Index and other technical indicators | |
| Share Portfolio Track or share privately all of your investments from the convenience of any device | |
| Portfolio Holdings Check your current holdings and cash postion to detemine if your portfolio needs rebalancing |