Correlation Between Pentair Plc and Eidesvik Offshore
Can any of the company-specific risk be diversified away by investing in both Pentair Plc and Eidesvik Offshore 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 Eidesvik Offshore into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Pentair plc and Eidesvik Offshore ASA, you can compare the effects of market volatilities on Pentair Plc and Eidesvik Offshore 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 Eidesvik Offshore. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pentair Plc and Eidesvik Offshore.
Diversification Opportunities for Pentair Plc and Eidesvik Offshore
-0.79 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Pentair and Eidesvik is -0.79. Overlapping area represents the amount of risk that can be diversified away by holding Pentair plc and Eidesvik Offshore ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eidesvik Offshore ASA 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 Eidesvik Offshore. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eidesvik Offshore ASA has no effect on the direction of Pentair Plc i.e., Pentair Plc and Eidesvik Offshore go up and down completely randomly.
Pair Corralation between Pentair Plc and Eidesvik Offshore
Assuming the 90 days horizon Pentair plc is expected to generate 0.63 times more return on investment than Eidesvik Offshore. However, Pentair plc is 1.6 times less risky than Eidesvik Offshore. It trades about 0.11 of its potential returns per unit of risk. Eidesvik Offshore ASA is currently generating about 0.05 per unit of risk. If you would invest 5,702 in Pentair plc on August 28, 2024 and sell it today you would earn a total of 4,528 from holding Pentair plc or generate 79.41% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Pentair plc vs. Eidesvik Offshore ASA
Performance |
| Timeline |
| Pentair plc |
| Eidesvik Offshore ASA |
Pentair Plc and Eidesvik Offshore Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pentair Plc and Eidesvik Offshore
The main advantage of trading using opposite Pentair Plc and Eidesvik Offshore positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pentair Plc position performs unexpectedly, Eidesvik Offshore 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 Eidesvik Offshore will offset losses from the drop in Eidesvik Offshore's long position.| Pentair Plc vs. Superior Plus Corp | Pentair Plc vs. NMI Holdings | Pentair Plc vs. Origin Agritech | Pentair Plc vs. SIVERS SEMICONDUCTORS AB |
| Eidesvik Offshore vs. Jacquet Metal Service | Eidesvik Offshore vs. Summit Hotel Properties | Eidesvik Offshore vs. American Airlines Group | Eidesvik Offshore vs. MIRAMAR HOTEL INV |
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 CEOs Directory module to screen CEOs from public companies around the world.
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