Correlation Between Pentair Plc and LIFENET INSURANCE
Can any of the company-specific risk be diversified away by investing in both Pentair Plc and LIFENET INSURANCE 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 LIFENET INSURANCE into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Pentair plc and LIFENET INSURANCE CO, you can compare the effects of market volatilities on Pentair Plc and LIFENET INSURANCE 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 LIFENET INSURANCE. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pentair Plc and LIFENET INSURANCE.
Diversification Opportunities for Pentair Plc and LIFENET INSURANCE
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Pentair and LIFENET is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Pentair plc and LIFENET INSURANCE CO in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LIFENET INSURANCE 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 LIFENET INSURANCE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LIFENET INSURANCE has no effect on the direction of Pentair Plc i.e., Pentair Plc and LIFENET INSURANCE go up and down completely randomly.
Pair Corralation between Pentair Plc and LIFENET INSURANCE
Assuming the 90 days horizon Pentair Plc is expected to generate 1.12 times less return on investment than LIFENET INSURANCE. But when comparing it to its historical volatility, Pentair plc is 1.67 times less risky than LIFENET INSURANCE. It trades about 0.15 of its potential returns per unit of risk. LIFENET INSURANCE CO is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 825.00 in LIFENET INSURANCE CO on August 29, 2024 and sell it today you would earn a total of 345.00 from holding LIFENET INSURANCE CO or generate 41.82% 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. LIFENET INSURANCE CO
Performance |
| Timeline |
| Pentair plc |
| LIFENET INSURANCE |
Pentair Plc and LIFENET INSURANCE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pentair Plc and LIFENET INSURANCE
The main advantage of trading using opposite Pentair Plc and LIFENET INSURANCE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pentair Plc position performs unexpectedly, LIFENET INSURANCE 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 LIFENET INSURANCE will offset losses from the drop in LIFENET INSURANCE's long position.| Pentair Plc vs. ABB | Pentair Plc vs. Superior Plus Corp | Pentair Plc vs. NMI Holdings | Pentair Plc vs. SIVERS SEMICONDUCTORS AB |
| LIFENET INSURANCE vs. Xtrackers LevDAX | LIFENET INSURANCE vs. Xtrackers ShortDAX | LIFENET INSURANCE vs. Lyxor 1 |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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