Correlation Between Pentair PLC and Ingersoll Rand
Can any of the company-specific risk be diversified away by investing in both Pentair PLC and Ingersoll Rand 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 Ingersoll Rand into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Pentair PLC and Ingersoll Rand, you can compare the effects of market volatilities on Pentair PLC and Ingersoll Rand 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 Ingersoll Rand. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pentair PLC and Ingersoll Rand.
Diversification Opportunities for Pentair PLC and Ingersoll Rand
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Pentair and Ingersoll is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Pentair PLC and Ingersoll Rand in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ingersoll Rand 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 Ingersoll Rand. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ingersoll Rand has no effect on the direction of Pentair PLC i.e., Pentair PLC and Ingersoll Rand go up and down completely randomly.
Pair Corralation between Pentair PLC and Ingersoll Rand
Considering the 90-day investment horizon Pentair PLC is expected to generate 0.91 times more return on investment than Ingersoll Rand. However, Pentair PLC is 1.1 times less risky than Ingersoll Rand. It trades about 0.13 of its potential returns per unit of risk. Ingersoll Rand is currently generating about 0.04 per unit of risk. If you would invest 10,040 in Pentair PLC on November 1, 2024 and sell it today you would earn a total of 310.00 from holding Pentair PLC or generate 3.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.0% |
| Values | Daily Returns |
Pentair PLC vs. Ingersoll Rand
Performance |
| Timeline |
| Pentair PLC |
| Ingersoll Rand |
Pentair PLC and Ingersoll Rand Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pentair PLC and Ingersoll Rand
The main advantage of trading using opposite Pentair PLC and Ingersoll Rand positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pentair PLC position performs unexpectedly, Ingersoll Rand 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 Ingersoll Rand will offset losses from the drop in Ingersoll Rand's long position.| Pentair PLC vs. Illinois Tool Works | Pentair PLC vs. Parker Hannifin | Pentair PLC vs. Emerson Electric | Pentair PLC vs. Smith AO |
| Ingersoll Rand vs. Aquagold International | Ingersoll Rand vs. Morningstar Unconstrained Allocation | Ingersoll Rand vs. Thrivent High Yield | Ingersoll Rand vs. High Yield Municipal Fund |
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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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