Correlation Between Pentair PLC and Enerpac Tool
Can any of the company-specific risk be diversified away by investing in both Pentair PLC and Enerpac Tool 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 Enerpac Tool into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Pentair PLC and Enerpac Tool Group, you can compare the effects of market volatilities on Pentair PLC and Enerpac Tool 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 Enerpac Tool. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pentair PLC and Enerpac Tool.
Diversification Opportunities for Pentair PLC and Enerpac Tool
0.9 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Pentair and Enerpac is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Pentair PLC and Enerpac Tool Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Enerpac Tool Group 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 Enerpac Tool. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Enerpac Tool Group has no effect on the direction of Pentair PLC i.e., Pentair PLC and Enerpac Tool go up and down completely randomly.
Pair Corralation between Pentair PLC and Enerpac Tool
Considering the 90-day investment horizon Pentair PLC is expected to generate 1.36 times less return on investment than Enerpac Tool. But when comparing it to its historical volatility, Pentair PLC is 2.09 times less risky than Enerpac Tool. It trades about 0.28 of its potential returns per unit of risk. Enerpac Tool Group is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest 4,185 in Enerpac Tool Group on August 30, 2024 and sell it today you would earn a total of 663.00 from holding Enerpac Tool Group or generate 15.84% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Pentair PLC vs. Enerpac Tool Group
Performance |
| Timeline |
| Pentair PLC |
| Enerpac Tool Group |
Pentair PLC and Enerpac Tool Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pentair PLC and Enerpac Tool
The main advantage of trading using opposite Pentair PLC and Enerpac Tool positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pentair PLC position performs unexpectedly, Enerpac Tool 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 Enerpac Tool will offset losses from the drop in Enerpac Tool's long position.| Pentair PLC vs. Illinois Tool Works | Pentair PLC vs. Parker Hannifin | Pentair PLC vs. Emerson Electric | Pentair PLC vs. Smith AO |
| Enerpac Tool vs. Illinois Tool Works | Enerpac Tool vs. Pentair PLC | Enerpac Tool vs. Emerson Electric | Enerpac Tool vs. Smith AO |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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