Correlation Between Pentair PLC and Cebu Air
Can any of the company-specific risk be diversified away by investing in both Pentair PLC and Cebu 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 Cebu 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 Cebu Air ADR, you can compare the effects of market volatilities on Pentair PLC and Cebu 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 Cebu Air. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pentair PLC and Cebu Air.
Diversification Opportunities for Pentair PLC and Cebu Air
-0.7 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Pentair and Cebu is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding Pentair PLC and Cebu Air ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cebu Air ADR 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 Cebu Air. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cebu Air ADR has no effect on the direction of Pentair PLC i.e., Pentair PLC and Cebu Air go up and down completely randomly.
Pair Corralation between Pentair PLC and Cebu Air
Considering the 90-day investment horizon Pentair PLC is expected to generate 0.34 times more return on investment than Cebu Air. However, Pentair PLC is 2.94 times less risky than Cebu Air. It trades about 0.39 of its potential returns per unit of risk. Cebu Air ADR is currently generating about -0.22 per unit of risk. If you would invest 9,899 in Pentair PLC on August 28, 2024 and sell it today you would earn a total of 895.00 from holding Pentair PLC or generate 9.04% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Pentair PLC vs. Cebu Air ADR
Performance |
| Timeline |
| Pentair PLC |
| Cebu Air ADR |
Pentair PLC and Cebu Air Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pentair PLC and Cebu Air
The main advantage of trading using opposite Pentair PLC and Cebu Air positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pentair PLC position performs unexpectedly, Cebu 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 Cebu Air will offset losses from the drop in Cebu Air's long position.| Pentair PLC vs. Illinois Tool Works | Pentair PLC vs. Parker Hannifin | Pentair PLC vs. Emerson Electric | Pentair PLC vs. Smith AO |
| Cebu Air vs. Marfrig Global Foods | Cebu Air vs. Grocery Outlet Holding | Cebu Air vs. Dalata Hotel Group | Cebu Air vs. Bt Brands |
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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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