Correlation Between Singapore Reinsurance and Pentair Plc
Can any of the company-specific risk be diversified away by investing in both Singapore Reinsurance 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 Singapore Reinsurance and Pentair Plc into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Singapore Reinsurance and Pentair plc, you can compare the effects of market volatilities on Singapore Reinsurance 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 Singapore Reinsurance with a short position of Pentair Plc. Check out your portfolio center. Please also check ongoing floating volatility patterns of Singapore Reinsurance and Pentair Plc.
Diversification Opportunities for Singapore Reinsurance and Pentair Plc
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Singapore and Pentair is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Singapore Reinsurance and Pentair plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pentair plc and Singapore Reinsurance 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 Singapore Reinsurance 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 Singapore Reinsurance i.e., Singapore Reinsurance and Pentair Plc go up and down completely randomly.
Pair Corralation between Singapore Reinsurance and Pentair Plc
Assuming the 90 days trading horizon Singapore Reinsurance is expected to generate 1.29 times more return on investment than Pentair Plc. However, Singapore Reinsurance is 1.29 times more volatile than Pentair plc. It trades about 0.12 of its potential returns per unit of risk. Pentair plc is currently generating about 0.15 per unit of risk. If you would invest 2,460 in Singapore Reinsurance on August 29, 2024 and sell it today you would earn a total of 1,000.00 from holding Singapore Reinsurance or generate 40.65% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Singapore Reinsurance vs. Pentair plc
Performance |
| Timeline |
| Singapore Reinsurance |
| Pentair plc |
Singapore Reinsurance and Pentair Plc Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Singapore Reinsurance and Pentair Plc
The main advantage of trading using opposite Singapore Reinsurance and Pentair Plc positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Singapore Reinsurance 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.| Singapore Reinsurance vs. Apple Inc | Singapore Reinsurance vs. Apple Inc | Singapore Reinsurance vs. Superior Plus Corp | Singapore Reinsurance vs. SIVERS SEMICONDUCTORS AB |
| Pentair Plc vs. ABB | Pentair Plc vs. Superior Plus Corp | Pentair Plc vs. NMI Holdings | Pentair Plc vs. SIVERS SEMICONDUCTORS AB |
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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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