Correlation Between Pentair Plc and ABB
Can any of the company-specific risk be diversified away by investing in both Pentair Plc and ABB 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 ABB into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Pentair plc and ABB, you can compare the effects of market volatilities on Pentair Plc and ABB 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 ABB. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pentair Plc and ABB.
Diversification Opportunities for Pentair Plc and ABB
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Pentair and ABB is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Pentair plc and ABB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ABB 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 ABB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ABB has no effect on the direction of Pentair Plc i.e., Pentair Plc and ABB go up and down completely randomly.
Pair Corralation between Pentair Plc and ABB
Assuming the 90 days horizon Pentair plc is expected to generate 0.55 times more return on investment than ABB. However, Pentair plc is 1.82 times less risky than ABB. It trades about 0.37 of its potential returns per unit of risk. ABB is currently generating about 0.01 per unit of risk. If you would invest 9,142 in Pentair plc on August 29, 2024 and sell it today you would earn a total of 1,113 from holding Pentair plc or generate 12.17% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Pentair plc vs. ABB
Performance |
| Timeline |
| Pentair plc |
| ABB |
Pentair Plc and ABB Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pentair Plc and ABB
The main advantage of trading using opposite Pentair Plc and ABB positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pentair Plc position performs unexpectedly, ABB 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 ABB will offset losses from the drop in ABB's long position.| Pentair Plc vs. ABB | Pentair Plc vs. Superior Plus Corp | Pentair Plc vs. NMI Holdings | Pentair Plc vs. SIVERS SEMICONDUCTORS AB |
| ABB vs. Wizz Air Holdings | ABB vs. Altair Engineering | ABB vs. Enter Air SA | ABB vs. Tianjin Capital Environmental |
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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
Other Complementary Tools
| Money Managers Screen money managers from public funds and ETFs managed around the world | |
| Headlines Timeline Stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity | |
| Commodity Directory Find actively traded commodities issued by global exchanges | |
| Risk-Return Analysis View associations between returns expected from investment and the risk you assume | |
| Price Transformation Use Price Transformation models to analyze the depth of different equity instruments across global markets |