Correlation Between Pentair PLC and HF Sinclair
Can any of the company-specific risk be diversified away by investing in both Pentair PLC and HF Sinclair 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 HF Sinclair into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Pentair PLC and HF Sinclair Corp, you can compare the effects of market volatilities on Pentair PLC and HF Sinclair 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 HF Sinclair. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pentair PLC and HF Sinclair.
Diversification Opportunities for Pentair PLC and HF Sinclair
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Pentair and DINO is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Pentair PLC and HF Sinclair Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HF Sinclair Corp 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 HF Sinclair. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HF Sinclair Corp has no effect on the direction of Pentair PLC i.e., Pentair PLC and HF Sinclair go up and down completely randomly.
Pair Corralation between Pentair PLC and HF Sinclair
Considering the 90-day investment horizon Pentair PLC is expected to generate 0.78 times more return on investment than HF Sinclair. However, Pentair PLC is 1.29 times less risky than HF Sinclair. It trades about 0.06 of its potential returns per unit of risk. HF Sinclair Corp is currently generating about -0.03 per unit of risk. If you would invest 5,288 in Pentair PLC on January 11, 2025 and sell it today you would earn a total of 2,796 from holding Pentair PLC or generate 52.87% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Pentair PLC vs. HF Sinclair Corp
Performance |
| Timeline |
| Pentair PLC |
| HF Sinclair Corp |
Pentair PLC and HF Sinclair Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pentair PLC and HF Sinclair
The main advantage of trading using opposite Pentair PLC and HF Sinclair positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pentair PLC position performs unexpectedly, HF Sinclair 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 HF Sinclair will offset losses from the drop in HF Sinclair's long position.| Pentair PLC vs. Illinois Tool Works | Pentair PLC vs. Parker Hannifin | Pentair PLC vs. Emerson Electric | Pentair PLC vs. Smith AO |
| HF Sinclair vs. Delek Energy | HF Sinclair vs. CVR Energy | HF Sinclair vs. Valero Energy | HF Sinclair vs. Marathon Petroleum Corp |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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