Correlation Between Pentair Plc and Delta Air
Can any of the company-specific risk be diversified away by investing in both Pentair Plc and Delta Air 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 Pentair Plc and Delta Air into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Pentair plc and Delta Air Lines, you can compare the effects of market volatilities on Pentair Plc and Delta Air 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 Pentair Plc with a short position of Delta Air. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pentair Plc and Delta Air.
Diversification Opportunities for Pentair Plc and Delta Air
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Pentair and Delta is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Pentair plc and Delta Air Lines in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Delta Air Lines and Pentair Plc 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 Pentair plc are associated (or correlated) with Delta Air. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Delta Air Lines has no effect on the direction of Pentair Plc i.e., Pentair Plc and Delta Air go up and down completely randomly.
Pair Corralation between Pentair Plc and Delta Air
Assuming the 90 days trading horizon Pentair plc is expected to generate 0.94 times more return on investment than Delta Air. However, Pentair plc is 1.06 times less risky than Delta Air. It trades about 0.1 of its potential returns per unit of risk. Delta Air Lines is currently generating about 0.08 per unit of risk. If you would invest 23,139 in Pentair plc on October 27, 2024 and sell it today you would earn a total of 38,601 from holding Pentair plc or generate 166.82% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 85.74% |
| Values | Daily Returns |
Pentair plc vs. Delta Air Lines
Performance |
| Timeline |
| Pentair plc |
| Delta Air Lines |
Pentair Plc and Delta Air Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pentair Plc and Delta Air
The main advantage of trading using opposite Pentair Plc and Delta Air positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pentair Plc position performs unexpectedly, Delta Air 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 Delta Air will offset losses from the drop in Delta Air's long position.| Pentair Plc vs. Bank of America | Pentair Plc vs. Zoom Video Communications | Pentair Plc vs. Globus Medical, | Pentair Plc vs. Arrow Electronics, |
| Delta Air vs. Palantir Technologies | Delta Air vs. Molson Coors Beverage | Delta Air vs. United Natural Foods, | Delta Air vs. Paycom Software |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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