Correlation Between Rockwell Automation and Pentair PLC
Can any of the company-specific risk be diversified away by investing in both Rockwell Automation 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 Rockwell Automation and Pentair PLC into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Rockwell Automation and Pentair PLC, you can compare the effects of market volatilities on Rockwell Automation 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 Rockwell Automation with a short position of Pentair PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Rockwell Automation and Pentair PLC.
Diversification Opportunities for Rockwell Automation and Pentair PLC
-0.01 | Correlation Coefficient |
Good diversification
The 3 months correlation between Rockwell and Pentair is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding Rockwell Automation and Pentair PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pentair PLC and Rockwell Automation 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 Rockwell Automation 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 Rockwell Automation i.e., Rockwell Automation and Pentair PLC go up and down completely randomly.
Pair Corralation between Rockwell Automation and Pentair PLC
Considering the 90-day investment horizon Rockwell Automation is expected to generate 1.41 times more return on investment than Pentair PLC. However, Rockwell Automation is 1.41 times more volatile than Pentair PLC. It trades about -0.07 of its potential returns per unit of risk. Pentair PLC is currently generating about -0.19 per unit of risk. If you would invest 28,246 in Rockwell Automation on January 25, 2024 and sell it today you would lose (690.00) from holding Rockwell Automation or give up 2.44% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Rockwell Automation vs. Pentair PLC
Performance |
Timeline |
Rockwell Automation |
Pentair PLC |
Rockwell Automation and Pentair PLC Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Rockwell Automation and Pentair PLC
The main advantage of trading using opposite Rockwell Automation and Pentair PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Rockwell Automation 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.Rockwell Automation vs. Enerpac Tool Group | Rockwell Automation vs. Enpro Industries | Rockwell Automation vs. Omega Flex | Rockwell Automation vs. Gorman Rupp |
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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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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