Correlation Between JLEN Environmental and Pentair PLC
Can any of the company-specific risk be diversified away by investing in both JLEN Environmental 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 JLEN Environmental and Pentair PLC into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between JLEN Environmental Assets and Pentair PLC, you can compare the effects of market volatilities on JLEN Environmental 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 JLEN Environmental with a short position of Pentair PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of JLEN Environmental and Pentair PLC.
Diversification Opportunities for JLEN Environmental and Pentair PLC
-0.9 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between JLEN and Pentair is -0.9. Overlapping area represents the amount of risk that can be diversified away by holding JLEN Environmental Assets and Pentair PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pentair PLC and JLEN Environmental 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 JLEN Environmental Assets 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 JLEN Environmental i.e., JLEN Environmental and Pentair PLC go up and down completely randomly.
Pair Corralation between JLEN Environmental and Pentair PLC
Assuming the 90 days trading horizon JLEN Environmental Assets is expected to under-perform the Pentair PLC. In addition to that, JLEN Environmental is 1.07 times more volatile than Pentair PLC. It trades about -0.24 of its total potential returns per unit of risk. Pentair PLC is currently generating about 0.3 per unit of volatility. If you would invest 8,650 in Pentair PLC on September 2, 2024 and sell it today you would earn a total of 2,249 from holding Pentair PLC or generate 26.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 98.46% |
| Values | Daily Returns |
JLEN Environmental Assets vs. Pentair PLC
Performance |
| Timeline |
| JLEN Environmental Assets |
| Pentair PLC |
JLEN Environmental and Pentair PLC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with JLEN Environmental and Pentair PLC
The main advantage of trading using opposite JLEN Environmental and Pentair PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if JLEN Environmental 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.| JLEN Environmental vs. Samsung Electronics Co | JLEN Environmental vs. Samsung Electronics Co | JLEN Environmental vs. Toyota Motor Corp | JLEN Environmental vs. Reliance Industries Ltd |
| Pentair PLC vs. Ecclesiastical Insurance Office | Pentair PLC vs. Vitec Software Group | Pentair PLC vs. Veolia Environnement VE | Pentair PLC vs. MTI Wireless Edge |
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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