Correlation Between Pentair Plc and SCANSOURCE
Can any of the company-specific risk be diversified away by investing in both Pentair Plc and SCANSOURCE 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 SCANSOURCE into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Pentair plc and SCANSOURCE, you can compare the effects of market volatilities on Pentair Plc and SCANSOURCE 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 SCANSOURCE. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pentair Plc and SCANSOURCE.
Diversification Opportunities for Pentair Plc and SCANSOURCE
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Pentair and SCANSOURCE is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Pentair plc and SCANSOURCE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SCANSOURCE 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 SCANSOURCE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SCANSOURCE has no effect on the direction of Pentair Plc i.e., Pentair Plc and SCANSOURCE go up and down completely randomly.
Pair Corralation between Pentair Plc and SCANSOURCE
Assuming the 90 days horizon Pentair Plc is expected to generate 2.36 times less return on investment than SCANSOURCE. But when comparing it to its historical volatility, Pentair plc is 2.21 times less risky than SCANSOURCE. It trades about 0.17 of its potential returns per unit of risk. SCANSOURCE is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest 4,640 in SCANSOURCE on September 16, 2024 and sell it today you would earn a total of 320.00 from holding SCANSOURCE or generate 6.9% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Pentair plc vs. SCANSOURCE
Performance |
| Timeline |
| Pentair plc |
| SCANSOURCE |
Pentair Plc and SCANSOURCE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pentair Plc and SCANSOURCE
The main advantage of trading using opposite Pentair Plc and SCANSOURCE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pentair Plc position performs unexpectedly, SCANSOURCE 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 SCANSOURCE will offset losses from the drop in SCANSOURCE's 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 |
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.
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