Correlation Between Pentair PLC and Crane
Can any of the company-specific risk be diversified away by investing in both Pentair PLC and Crane 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 Crane into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Pentair PLC and Crane Company, you can compare the effects of market volatilities on Pentair PLC and Crane 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 Crane. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pentair PLC and Crane.
Diversification Opportunities for Pentair PLC and Crane
0.41 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Pentair and Crane is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Pentair PLC and Crane Company in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Crane Company 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 Crane. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Crane Company has no effect on the direction of Pentair PLC i.e., Pentair PLC and Crane go up and down completely randomly.
Pair Corralation between Pentair PLC and Crane
Considering the 90-day investment horizon Pentair PLC is expected to generate 1.58 times less return on investment than Crane. But when comparing it to its historical volatility, Pentair PLC is 1.27 times less risky than Crane. It trades about 0.08 of its potential returns per unit of risk. Crane Company is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 7,117 in Crane Company on November 27, 2024 and sell it today you would earn a total of 8,961 from holding Crane Company or generate 125.91% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 96.96% |
| Values | Daily Returns |
Pentair PLC vs. Crane Company
Performance |
| Timeline |
| Pentair PLC |
| Crane Company |
Pentair PLC and Crane Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pentair PLC and Crane
The main advantage of trading using opposite Pentair PLC and Crane positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pentair PLC position performs unexpectedly, Crane 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 Crane will offset losses from the drop in Crane's long position.| Pentair PLC vs. Illinois Tool Works | Pentair PLC vs. Parker Hannifin | Pentair PLC vs. Emerson Electric | Pentair PLC vs. Smith AO |
| Crane vs. Standex International | Crane vs. Donaldson | Crane vs. CSW Industrials | Crane vs. Franklin Electric Co |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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