Correlation Between Terex and Pentair PLC
Can any of the company-specific risk be diversified away by investing in both Terex 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 Terex and Pentair PLC into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Terex and Pentair PLC, you can compare the effects of market volatilities on Terex 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 Terex with a short position of Pentair PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Terex and Pentair PLC.
Diversification Opportunities for Terex and Pentair PLC
0.33 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Terex and Pentair is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Terex and Pentair PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pentair PLC and Terex 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 Terex 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 Terex i.e., Terex and Pentair PLC go up and down completely randomly.
Pair Corralation between Terex and Pentair PLC
Considering the 90-day investment horizon Terex is expected to generate 1.41 times more return on investment than Pentair PLC. However, Terex is 1.41 times more volatile than Pentair PLC. It trades about 0.06 of its potential returns per unit of risk. Pentair PLC is currently generating about 0.06 per unit of risk. If you would invest 3,401 in Terex on January 25, 2024 and sell it today you would earn a total of 2,699 from holding Terex or generate 79.36% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Terex vs. Pentair PLC
Performance |
Timeline |
Terex |
Pentair PLC |
Terex and Pentair PLC Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Terex and Pentair PLC
The main advantage of trading using opposite Terex and Pentair PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Terex 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.Terex vs. Oshkosh | Terex vs. Astec Industries | Terex vs. Hyster Yale Materials Handling | Terex vs. Manitex International |
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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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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