Correlation Between Pentair Plc and General Mills
Can any of the company-specific risk be diversified away by investing in both Pentair Plc and General Mills 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 General Mills into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Pentair plc and General Mills, you can compare the effects of market volatilities on Pentair Plc and General Mills 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 General Mills. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pentair Plc and General Mills.
Diversification Opportunities for Pentair Plc and General Mills
0.92 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Pentair and General is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Pentair plc and General Mills in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on General Mills 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 General Mills. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of General Mills has no effect on the direction of Pentair Plc i.e., Pentair Plc and General Mills go up and down completely randomly.
Pair Corralation between Pentair Plc and General Mills
Assuming the 90 days horizon Pentair plc is expected to generate 0.55 times more return on investment than General Mills. However, Pentair plc is 1.82 times less risky than General Mills. It trades about 0.16 of its potential returns per unit of risk. General Mills is currently generating about -0.02 per unit of risk. If you would invest 9,894 in Pentair plc on September 13, 2024 and sell it today you would earn a total of 331.00 from holding Pentair plc or generate 3.35% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Pentair plc vs. General Mills
Performance |
| Timeline |
| Pentair plc |
| General Mills |
Pentair Plc and General Mills Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pentair Plc and General Mills
The main advantage of trading using opposite Pentair Plc and General Mills positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pentair Plc position performs unexpectedly, General Mills 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 General Mills will offset losses from the drop in General Mills' long position.| Pentair Plc vs. Schneider Electric SE | Pentair Plc vs. Superior Plus Corp | Pentair Plc vs. SIVERS SEMICONDUCTORS AB | Pentair Plc vs. Norsk Hydro ASA |
| General Mills vs. Gaztransport Technigaz SA | General Mills vs. Air Lease | General Mills vs. TEXAS ROADHOUSE | General Mills vs. ALBIS LEASING AG |
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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