Correlation Between Pentair PLC and Flutter Entertainment
Can any of the company-specific risk be diversified away by investing in both Pentair PLC and Flutter Entertainment 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 Flutter Entertainment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Pentair PLC and Flutter Entertainment plc, you can compare the effects of market volatilities on Pentair PLC and Flutter Entertainment 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 Flutter Entertainment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pentair PLC and Flutter Entertainment.
Diversification Opportunities for Pentair PLC and Flutter Entertainment
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Pentair and Flutter is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Pentair PLC and Flutter Entertainment plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Flutter Entertainment plc 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 Flutter Entertainment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Flutter Entertainment plc has no effect on the direction of Pentair PLC i.e., Pentair PLC and Flutter Entertainment go up and down completely randomly.
Pair Corralation between Pentair PLC and Flutter Entertainment
Considering the 90-day investment horizon Pentair PLC is expected to under-perform the Flutter Entertainment. But the stock apears to be less risky and, when comparing its historical volatility, Pentair PLC is 1.26 times less risky than Flutter Entertainment. The stock trades about -0.06 of its potential returns per unit of risk. The Flutter Entertainment plc is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 24,804 in Flutter Entertainment plc on November 8, 2024 and sell it today you would earn a total of 1,820 from holding Flutter Entertainment plc or generate 7.34% 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. Flutter Entertainment plc
Performance |
| Timeline |
| Pentair PLC |
| Flutter Entertainment plc |
Pentair PLC and Flutter Entertainment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pentair PLC and Flutter Entertainment
The main advantage of trading using opposite Pentair PLC and Flutter Entertainment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pentair PLC position performs unexpectedly, Flutter Entertainment 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 Flutter Entertainment will offset losses from the drop in Flutter Entertainment's long position.| Pentair PLC vs. Illinois Tool Works | Pentair PLC vs. Parker Hannifin | Pentair PLC vs. Emerson Electric | Pentair PLC vs. Smith AO |
| Flutter Entertainment vs. ANTA Sports Products | Flutter Entertainment vs. Coupang LLC | Flutter Entertainment vs. Sonos Inc | Flutter Entertainment vs. Olympic Steel |
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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