Correlation Between Pentair Plc and Kaiser Aluminum
Can any of the company-specific risk be diversified away by investing in both Pentair Plc and Kaiser Aluminum 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 Kaiser Aluminum into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Pentair plc and Kaiser Aluminum, you can compare the effects of market volatilities on Pentair Plc and Kaiser Aluminum 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 Kaiser Aluminum. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pentair Plc and Kaiser Aluminum.
Diversification Opportunities for Pentair Plc and Kaiser Aluminum
0.58 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Pentair and Kaiser is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Pentair plc and Kaiser Aluminum in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kaiser Aluminum 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 Kaiser Aluminum. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kaiser Aluminum has no effect on the direction of Pentair Plc i.e., Pentair Plc and Kaiser Aluminum go up and down completely randomly.
Pair Corralation between Pentair Plc and Kaiser Aluminum
Assuming the 90 days horizon Pentair plc is expected to generate 0.58 times more return on investment than Kaiser Aluminum. However, Pentair plc is 1.73 times less risky than Kaiser Aluminum. It trades about 0.13 of its potential returns per unit of risk. Kaiser Aluminum is currently generating about 0.0 per unit of risk. If you would invest 8,125 in Pentair plc on October 26, 2024 and sell it today you would earn a total of 1,965 from holding Pentair plc or generate 24.18% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Pentair plc vs. Kaiser Aluminum
Performance |
| Timeline |
| Pentair plc |
| Kaiser Aluminum |
Pentair Plc and Kaiser Aluminum Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pentair Plc and Kaiser Aluminum
The main advantage of trading using opposite Pentair Plc and Kaiser Aluminum positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pentair Plc position performs unexpectedly, Kaiser Aluminum 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 Kaiser Aluminum will offset losses from the drop in Kaiser Aluminum's long position.| Pentair Plc vs. AMAG Austria Metall | Pentair Plc vs. Transport International Holdings | Pentair Plc vs. Nippon Light Metal | Pentair Plc vs. Air Lease |
| Kaiser Aluminum vs. SOGECLAIR SA INH | Kaiser Aluminum vs. Pentair plc | Kaiser Aluminum vs. Meta Financial Group | Kaiser Aluminum vs. UNIQA INSURANCE GR |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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