Correlation Between Arch Capital and Pentair Plc
Can any of the company-specific risk be diversified away by investing in both Arch Capital and Pentair Plc 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 Arch Capital and Pentair Plc into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Arch Capital Group and Pentair plc, you can compare the effects of market volatilities on Arch Capital and Pentair Plc 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 Arch Capital with a short position of Pentair Plc. Check out your portfolio center. Please also check ongoing floating volatility patterns of Arch Capital and Pentair Plc.
Diversification Opportunities for Arch Capital and Pentair Plc
-0.47 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Arch and Pentair is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding Arch Capital Group and Pentair plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pentair plc and Arch Capital 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 Arch Capital Group are associated (or correlated) with Pentair Plc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pentair plc has no effect on the direction of Arch Capital i.e., Arch Capital and Pentair Plc go up and down completely randomly.
Pair Corralation between Arch Capital and Pentair Plc
Assuming the 90 days horizon Arch Capital is expected to generate 1.48 times less return on investment than Pentair Plc. In addition to that, Arch Capital is 1.03 times more volatile than Pentair plc. It trades about 0.07 of its total potential returns per unit of risk. Pentair plc is currently generating about 0.11 per unit of volatility. If you would invest 5,394 in Pentair plc on September 2, 2024 and sell it today you would earn a total of 4,921 from holding Pentair plc or generate 91.23% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Arch Capital Group vs. Pentair plc
Performance |
| Timeline |
| Arch Capital Group |
| Pentair plc |
Arch Capital and Pentair Plc Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Arch Capital and Pentair Plc
The main advantage of trading using opposite Arch Capital and Pentair Plc positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Arch Capital position performs unexpectedly, Pentair Plc 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 Pentair Plc will offset losses from the drop in Pentair Plc's long position.| Arch Capital vs. GRIFFIN MINING LTD | Arch Capital vs. Ross Stores | Arch Capital vs. Fast Retailing Co | Arch Capital vs. Caseys General Stores |
| Pentair Plc vs. COVIVIO HOTELS INH | Pentair Plc vs. Park Hotels Resorts | Pentair Plc vs. Host Hotels Resorts | Pentair Plc vs. QUEEN S ROAD |
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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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