Correlation Between Pentair PLC and Grocery Outlet
Can any of the company-specific risk be diversified away by investing in both Pentair PLC and Grocery Outlet 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 Grocery Outlet into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Pentair PLC and Grocery Outlet Holding, you can compare the effects of market volatilities on Pentair PLC and Grocery Outlet 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 Grocery Outlet. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pentair PLC and Grocery Outlet.
Diversification Opportunities for Pentair PLC and Grocery Outlet
0.35 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Pentair and Grocery is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Pentair PLC and Grocery Outlet Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Grocery Outlet Holding 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 Grocery Outlet. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Grocery Outlet Holding has no effect on the direction of Pentair PLC i.e., Pentair PLC and Grocery Outlet go up and down completely randomly.
Pair Corralation between Pentair PLC and Grocery Outlet
Considering the 90-day investment horizon Pentair PLC is expected to generate 3.4 times less return on investment than Grocery Outlet. But when comparing it to its historical volatility, Pentair PLC is 3.65 times less risky than Grocery Outlet. It trades about 0.47 of its potential returns per unit of risk. Grocery Outlet Holding is currently generating about 0.44 of returns per unit of risk over similar time horizon. If you would invest 1,505 in Grocery Outlet Holding on September 2, 2024 and sell it today you would earn a total of 595.00 from holding Grocery Outlet Holding or generate 39.53% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Pentair PLC vs. Grocery Outlet Holding
Performance |
| Timeline |
| Pentair PLC |
| Grocery Outlet Holding |
Pentair PLC and Grocery Outlet Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pentair PLC and Grocery Outlet
The main advantage of trading using opposite Pentair PLC and Grocery Outlet positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pentair PLC position performs unexpectedly, Grocery Outlet 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 Grocery Outlet will offset losses from the drop in Grocery Outlet's long position.| Pentair PLC vs. Illinois Tool Works | Pentair PLC vs. Parker Hannifin | Pentair PLC vs. Emerson Electric | Pentair PLC vs. Smith AO |
| Grocery Outlet vs. Natural Grocers by | Grocery Outlet vs. Village Super Market | Grocery Outlet vs. Ingles Markets Incorporated | Grocery Outlet vs. Ocado Group plc |
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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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