Correlation Between Pentair PLC and WK Kellogg
Can any of the company-specific risk be diversified away by investing in both Pentair PLC and WK Kellogg 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 WK Kellogg into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Pentair PLC and WK Kellogg Co, you can compare the effects of market volatilities on Pentair PLC and WK Kellogg 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 WK Kellogg. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pentair PLC and WK Kellogg.
Diversification Opportunities for Pentair PLC and WK Kellogg
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Pentair and KLG is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Pentair PLC and WK Kellogg Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WK Kellogg 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 WK Kellogg. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WK Kellogg has no effect on the direction of Pentair PLC i.e., Pentair PLC and WK Kellogg go up and down completely randomly.
Pair Corralation between Pentair PLC and WK Kellogg
Considering the 90-day investment horizon Pentair PLC is expected to generate 0.46 times more return on investment than WK Kellogg. However, Pentair PLC is 2.17 times less risky than WK Kellogg. It trades about 0.13 of its potential returns per unit of risk. WK Kellogg Co is currently generating about -0.08 per unit of risk. If you would invest 10,014 in Pentair PLC on October 29, 2024 and sell it today you would earn a total of 287.00 from holding Pentair PLC or generate 2.87% 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. WK Kellogg Co
Performance |
| Timeline |
| Pentair PLC |
| WK Kellogg |
Pentair PLC and WK Kellogg Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pentair PLC and WK Kellogg
The main advantage of trading using opposite Pentair PLC and WK Kellogg positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pentair PLC position performs unexpectedly, WK Kellogg 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 WK Kellogg will offset losses from the drop in WK Kellogg's long position.| Pentair PLC vs. Illinois Tool Works | Pentair PLC vs. Parker Hannifin | Pentair PLC vs. Emerson Electric | Pentair PLC vs. Smith AO |
| WK Kellogg vs. Dine Brands Global | WK Kellogg vs. NH Foods Ltd | WK Kellogg vs. Bridgford Foods | WK Kellogg vs. SunOpta |
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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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