Correlation Between Snap On and Pentair PLC
Can any of the company-specific risk be diversified away by investing in both Snap On 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 Snap On and Pentair PLC into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Snap On and Pentair PLC, you can compare the effects of market volatilities on Snap On 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 Snap On with a short position of Pentair PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Snap On and Pentair PLC.
Diversification Opportunities for Snap On and Pentair PLC
0.49 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Snap and Pentair is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Snap On and Pentair PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pentair PLC and Snap On 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 Snap On 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 Snap On i.e., Snap On and Pentair PLC go up and down completely randomly.
Pair Corralation between Snap On and Pentair PLC
Considering the 90-day investment horizon Snap On is expected to under-perform the Pentair PLC. In addition to that, Snap On is 1.42 times more volatile than Pentair PLC. It trades about -0.28 of its total potential returns per unit of risk. Pentair PLC is currently generating about -0.17 per unit of volatility. If you would invest 8,228 in Pentair PLC on January 20, 2024 and sell it today you would lose (380.00) from holding Pentair PLC or give up 4.62% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Snap On vs. Pentair PLC
Performance |
Timeline |
Snap On |
Pentair PLC |
Snap On and Pentair PLC Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Snap On and Pentair PLC
The main advantage of trading using opposite Snap On and Pentair PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Snap On 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.Snap On vs. Lincoln Electric Holdings | Snap On vs. Timken Company | Snap On vs. RBC Bearings | Snap On vs. Kennametal |
Pentair PLC vs. Emerson Electric | Pentair PLC vs. Smith AO | Pentair PLC vs. Eaton PLC | Pentair PLC vs. Cummins |
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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