Correlation Between Pentair PLC and BCB Bancorp
Can any of the company-specific risk be diversified away by investing in both Pentair PLC and BCB Bancorp 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 BCB Bancorp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Pentair PLC and BCB Bancorp, you can compare the effects of market volatilities on Pentair PLC and BCB Bancorp 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 BCB Bancorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pentair PLC and BCB Bancorp.
Diversification Opportunities for Pentair PLC and BCB Bancorp
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Pentair and BCB is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Pentair PLC and BCB Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BCB Bancorp 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 BCB Bancorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BCB Bancorp has no effect on the direction of Pentair PLC i.e., Pentair PLC and BCB Bancorp go up and down completely randomly.
Pair Corralation between Pentair PLC and BCB Bancorp
Considering the 90-day investment horizon Pentair PLC is expected to generate 1.05 times less return on investment than BCB Bancorp. But when comparing it to its historical volatility, Pentair PLC is 2.07 times less risky than BCB Bancorp. It trades about 0.4 of its potential returns per unit of risk. BCB Bancorp is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest 1,186 in BCB Bancorp on September 5, 2024 and sell it today you would earn a total of 111.00 from holding BCB Bancorp or generate 9.36% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Pentair PLC vs. BCB Bancorp
Performance |
| Timeline |
| Pentair PLC |
| BCB Bancorp |
Pentair PLC and BCB Bancorp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pentair PLC and BCB Bancorp
The main advantage of trading using opposite Pentair PLC and BCB Bancorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pentair PLC position performs unexpectedly, BCB Bancorp 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 BCB Bancorp will offset losses from the drop in BCB Bancorp's long position.| Pentair PLC vs. Laser Photonics | Pentair PLC vs. Siemens AG Class | Pentair PLC vs. ATVRockN | Pentair PLC vs. Nuburu Inc |
| BCB Bancorp vs. Provident Financial Services | BCB Bancorp vs. First Mid Illinois | BCB Bancorp vs. ConnectOne Bancorp | BCB Bancorp vs. Finward Bancorp |
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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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