Correlation Between Afentra PLC and Pentair PLC
Can any of the company-specific risk be diversified away by investing in both Afentra PLC 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 Afentra PLC and Pentair PLC into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Afentra PLC and Pentair PLC, you can compare the effects of market volatilities on Afentra PLC 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 Afentra PLC with a short position of Pentair PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Afentra PLC and Pentair PLC.
Diversification Opportunities for Afentra PLC and Pentair PLC
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Afentra and Pentair is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Afentra PLC and Pentair PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pentair PLC and Afentra 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 Afentra PLC 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 Afentra PLC i.e., Afentra PLC and Pentair PLC go up and down completely randomly.
Pair Corralation between Afentra PLC and Pentair PLC
Assuming the 90 days horizon Afentra PLC is expected to generate 1.75 times more return on investment than Pentair PLC. However, Afentra PLC is 1.75 times more volatile than Pentair PLC. It trades about 0.11 of its potential returns per unit of risk. Pentair PLC is currently generating about 0.11 per unit of risk. If you would invest 57.00 in Afentra PLC on September 3, 2024 and sell it today you would earn a total of 10.00 from holding Afentra PLC or generate 17.54% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 33.73% |
| Values | Daily Returns |
Afentra PLC vs. Pentair PLC
Performance |
| Timeline |
| Afentra PLC |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Pentair PLC |
Afentra PLC and Pentair PLC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Afentra PLC and Pentair PLC
The main advantage of trading using opposite Afentra PLC and Pentair PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Afentra PLC 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.| Afentra PLC vs. Jeld Wen Holding | Afentra PLC vs. Western Copper and | Afentra PLC vs. Sonida Senior Living | Afentra PLC vs. Parker Hannifin |
| Pentair PLC vs. Illinois Tool Works | Pentair PLC vs. Parker Hannifin | Pentair PLC vs. Emerson Electric | Pentair PLC vs. Smith AO |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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