Correlation Between Pentair PLC and PennantPark Floating
Can any of the company-specific risk be diversified away by investing in both Pentair PLC and PennantPark Floating 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 PennantPark Floating into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Pentair PLC and PennantPark Floating Rate, you can compare the effects of market volatilities on Pentair PLC and PennantPark Floating 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 PennantPark Floating. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pentair PLC and PennantPark Floating.
Diversification Opportunities for Pentair PLC and PennantPark Floating
-0.13 | Correlation Coefficient |
Good diversification
The 3 months correlation between Pentair and PennantPark is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding Pentair PLC and PennantPark Floating Rate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PennantPark Floating Rate 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 PennantPark Floating. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PennantPark Floating Rate has no effect on the direction of Pentair PLC i.e., Pentair PLC and PennantPark Floating go up and down completely randomly.
Pair Corralation between Pentair PLC and PennantPark Floating
Considering the 90-day investment horizon Pentair PLC is expected to generate 1.75 times more return on investment than PennantPark Floating. However, Pentair PLC is 1.75 times more volatile than PennantPark Floating Rate. It trades about 0.12 of its potential returns per unit of risk. PennantPark Floating Rate is currently generating about 0.06 per unit of risk. If you would invest 6,352 in Pentair PLC on September 4, 2024 and sell it today you would earn a total of 4,540 from holding Pentair PLC or generate 71.47% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Pentair PLC vs. PennantPark Floating Rate
Performance |
| Timeline |
| Pentair PLC |
| PennantPark Floating Rate |
Pentair PLC and PennantPark Floating Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pentair PLC and PennantPark Floating
The main advantage of trading using opposite Pentair PLC and PennantPark Floating positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pentair PLC position performs unexpectedly, PennantPark Floating 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 PennantPark Floating will offset losses from the drop in PennantPark Floating's long position.| Pentair PLC vs. Illinois Tool Works | Pentair PLC vs. Parker Hannifin | Pentair PLC vs. Emerson Electric | Pentair PLC vs. Smith AO |
| PennantPark Floating vs. Visa Class A | PennantPark Floating vs. Diamond Hill Investment | PennantPark Floating vs. Distoken Acquisition | PennantPark Floating vs. Associated Capital Group |
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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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