Correlation Between Pentair Plc and Regions Financial
Can any of the company-specific risk be diversified away by investing in both Pentair Plc and Regions Financial 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 Regions Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Pentair plc and Regions Financial, you can compare the effects of market volatilities on Pentair Plc and Regions Financial 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 Regions Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pentair Plc and Regions Financial.
Diversification Opportunities for Pentair Plc and Regions Financial
0.93 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Pentair and Regions is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Pentair plc and Regions Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Regions Financial 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 Regions Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Regions Financial has no effect on the direction of Pentair Plc i.e., Pentair Plc and Regions Financial go up and down completely randomly.
Pair Corralation between Pentair Plc and Regions Financial
Assuming the 90 days horizon Pentair Plc is expected to generate 1.19 times less return on investment than Regions Financial. In addition to that, Pentair Plc is 1.04 times more volatile than Regions Financial. It trades about 0.16 of its total potential returns per unit of risk. Regions Financial is currently generating about 0.2 per unit of volatility. If you would invest 1,690 in Regions Financial on September 3, 2024 and sell it today you would earn a total of 910.00 from holding Regions Financial or generate 53.85% 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. Regions Financial
Performance |
| Timeline |
| Pentair plc |
| Regions Financial |
Pentair Plc and Regions Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pentair Plc and Regions Financial
The main advantage of trading using opposite Pentair Plc and Regions Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pentair Plc position performs unexpectedly, Regions Financial 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 Regions Financial will offset losses from the drop in Regions Financial's long position.| Pentair Plc vs. Bumrungrad Hospital Public | Pentair Plc vs. METHODE ELECTRONICS | Pentair Plc vs. AOI Electronics Co | Pentair Plc vs. Brockhaus Capital Management |
| Regions Financial vs. Perma Fix Environmental Services | Regions Financial vs. ALGOMA STEEL GROUP | Regions Financial vs. USU Software AG | Regions Financial vs. Steel Dynamics |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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