Correlation Between Pentair Plc and Schibsted ASA
Can any of the company-specific risk be diversified away by investing in both Pentair Plc and Schibsted ASA 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 Schibsted ASA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Pentair plc and Schibsted ASA B, you can compare the effects of market volatilities on Pentair Plc and Schibsted ASA 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 Schibsted ASA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pentair Plc and Schibsted ASA.
Diversification Opportunities for Pentair Plc and Schibsted ASA
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Pentair and Schibsted is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Pentair plc and Schibsted ASA B in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Schibsted ASA B 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 Schibsted ASA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Schibsted ASA B has no effect on the direction of Pentair Plc i.e., Pentair Plc and Schibsted ASA go up and down completely randomly.
Pair Corralation between Pentair Plc and Schibsted ASA
Assuming the 90 days horizon Pentair Plc is expected to generate 1.48 times less return on investment than Schibsted ASA. But when comparing it to its historical volatility, Pentair plc is 1.89 times less risky than Schibsted ASA. It trades about 0.1 of its potential returns per unit of risk. Schibsted ASA B is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 1,010 in Schibsted ASA B on October 16, 2024 and sell it today you would earn a total of 1,752 from holding Schibsted ASA B or generate 173.47% 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. Schibsted ASA B
Performance |
| Timeline |
| Pentair plc |
| Schibsted ASA B |
Pentair Plc and Schibsted ASA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pentair Plc and Schibsted ASA
The main advantage of trading using opposite Pentair Plc and Schibsted ASA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pentair Plc position performs unexpectedly, Schibsted ASA 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 Schibsted ASA will offset losses from the drop in Schibsted ASA's long position.| Pentair Plc vs. Universal Entertainment | Pentair Plc vs. TRAINLINE PLC LS | Pentair Plc vs. ATRESMEDIA | Pentair Plc vs. CNVISION MEDIA |
| Schibsted ASA vs. Coffee Holding Co | Schibsted ASA vs. FORWARD AIR P | Schibsted ASA vs. SYSTEMAIR AB | Schibsted ASA vs. Pentair plc |
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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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