Correlation Between Pentair PLC and Standard Bank
Can any of the company-specific risk be diversified away by investing in both Pentair PLC and Standard Bank 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 Standard Bank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Pentair PLC and Standard Bank Group, you can compare the effects of market volatilities on Pentair PLC and Standard Bank 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 Standard Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pentair PLC and Standard Bank.
Diversification Opportunities for Pentair PLC and Standard Bank
-0.56 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Pentair and Standard is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding Pentair PLC and Standard Bank Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Standard Bank Group 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 Standard Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Standard Bank Group has no effect on the direction of Pentair PLC i.e., Pentair PLC and Standard Bank go up and down completely randomly.
Pair Corralation between Pentair PLC and Standard Bank
Considering the 90-day investment horizon Pentair PLC is expected to generate 0.76 times more return on investment than Standard Bank. However, Pentair PLC is 1.32 times less risky than Standard Bank. It trades about 0.09 of its potential returns per unit of risk. Standard Bank Group is currently generating about 0.01 per unit of risk. If you would invest 5,441 in Pentair PLC on January 25, 2024 and sell it today you would earn a total of 2,406 from holding Pentair PLC or generate 44.22% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Pentair PLC vs. Standard Bank Group
Performance |
Timeline |
Pentair PLC |
Standard Bank Group |
Pentair PLC and Standard Bank Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Pentair PLC and Standard Bank
The main advantage of trading using opposite Pentair PLC and Standard Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pentair PLC position performs unexpectedly, Standard Bank 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 Standard Bank will offset losses from the drop in Standard Bank's long position.Pentair PLC vs. Emerson Electric | Pentair PLC vs. Eaton PLC | Pentair PLC vs. Generac Holdings | Pentair PLC vs. Cummins |
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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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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