Correlation Between Pentair Plc and BW OFFSHORE
Can any of the company-specific risk be diversified away by investing in both Pentair Plc and BW OFFSHORE 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 BW OFFSHORE into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Pentair plc and BW OFFSHORE LTD, you can compare the effects of market volatilities on Pentair Plc and BW OFFSHORE 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 BW OFFSHORE. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pentair Plc and BW OFFSHORE.
Diversification Opportunities for Pentair Plc and BW OFFSHORE
-0.38 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Pentair and XY81 is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding Pentair plc and BW OFFSHORE LTD in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BW OFFSHORE LTD 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 BW OFFSHORE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BW OFFSHORE LTD has no effect on the direction of Pentair Plc i.e., Pentair Plc and BW OFFSHORE go up and down completely randomly.
Pair Corralation between Pentair Plc and BW OFFSHORE
Assuming the 90 days horizon Pentair plc is expected to generate 0.6 times more return on investment than BW OFFSHORE. However, Pentair plc is 1.66 times less risky than BW OFFSHORE. It trades about -0.17 of its potential returns per unit of risk. BW OFFSHORE LTD is currently generating about -0.11 per unit of risk. If you would invest 10,230 in Pentair plc on September 24, 2024 and sell it today you would lose (536.00) from holding Pentair plc or give up 5.24% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Pentair plc vs. BW OFFSHORE LTD
Performance |
| Timeline |
| Pentair plc |
| BW OFFSHORE LTD |
Pentair Plc and BW OFFSHORE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pentair Plc and BW OFFSHORE
The main advantage of trading using opposite Pentair Plc and BW OFFSHORE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pentair Plc position performs unexpectedly, BW OFFSHORE 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 BW OFFSHORE will offset losses from the drop in BW OFFSHORE's long position.| Pentair Plc vs. Honeywell International | Pentair Plc vs. Schneider Electric SE | Pentair Plc vs. Illinois Tool Works | Pentair Plc vs. Eaton PLC |
| BW OFFSHORE vs. Grand Canyon Education | BW OFFSHORE vs. Gamma Communications plc | BW OFFSHORE vs. CHINA EDUCATION GROUP | BW OFFSHORE vs. INTERSHOP Communications Aktiengesellschaft |
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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
Other Complementary Tools
| Watchlist Optimization Optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm | |
| Portfolio Holdings Check your current holdings and cash postion to detemine if your portfolio needs rebalancing | |
| Bonds Directory Find actively traded corporate debentures issued by US companies | |
| Top Crypto Exchanges Search and analyze digital assets across top global cryptocurrency exchanges | |
| Insider Screener Find insiders across different sectors to evaluate their impact on performance |