Correlation Between Pentair PLC and KeyCorp
Can any of the company-specific risk be diversified away by investing in both Pentair PLC and KeyCorp 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 KeyCorp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Pentair PLC and KeyCorp, you can compare the effects of market volatilities on Pentair PLC and KeyCorp 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 KeyCorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pentair PLC and KeyCorp.
Diversification Opportunities for Pentair PLC and KeyCorp
0.25 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Pentair and KeyCorp is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Pentair PLC and KeyCorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KeyCorp 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 KeyCorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KeyCorp has no effect on the direction of Pentair PLC i.e., Pentair PLC and KeyCorp go up and down completely randomly.
Pair Corralation between Pentair PLC and KeyCorp
Considering the 90-day investment horizon Pentair PLC is expected to generate 1.22 times more return on investment than KeyCorp. However, Pentair PLC is 1.22 times more volatile than KeyCorp. It trades about 0.4 of its potential returns per unit of risk. KeyCorp is currently generating about -0.09 per unit of risk. If you would invest 9,965 in Pentair PLC on September 5, 2024 and sell it today you would earn a total of 918.00 from holding Pentair PLC or generate 9.21% 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. KeyCorp
Performance |
| Timeline |
| Pentair PLC |
| KeyCorp |
Pentair PLC and KeyCorp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pentair PLC and KeyCorp
The main advantage of trading using opposite Pentair PLC and KeyCorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pentair PLC position performs unexpectedly, KeyCorp 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 KeyCorp will offset losses from the drop in KeyCorp's long position.| Pentair PLC vs. Laser Photonics | Pentair PLC vs. Siemens AG Class | Pentair PLC vs. ATVRockN | Pentair PLC vs. Nuburu Inc |
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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