Correlation Between Pentair Plc and Glatfelter

Can any of the company-specific risk be diversified away by investing in both Pentair Plc and Glatfelter 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 Glatfelter into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Pentair plc and Glatfelter, you can compare the effects of market volatilities on Pentair Plc and Glatfelter 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 Glatfelter. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pentair Plc and Glatfelter.

Diversification Opportunities for Pentair Plc and Glatfelter

0.44

Correlation Coefficient

Pentair Plc  Glatfelter

Very weak diversification

The 3 months correlation between Pentair and Glatfelter is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Pentair plc and Glatfelter in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Glatfelter 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 Glatfelter. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Glatfelter has no effect on the direction of Pentair Plc i.e., Pentair Plc and Glatfelter go up and down completely randomly.

Pair Corralation between Pentair Plc and Glatfelter

Assuming the 90 days horizon Pentair plc is expected to generate 0.7 times more return on investment than Glatfelter. However, Pentair plc is 1.43 times less risky than Glatfelter. It trades about 0.15 of its potential returns per unit of risk. Glatfelter is currently generating about 0.03 per unit of risk. If you would invest  8,560  in Pentair plc on September 25, 2024 and sell it today you would earn a total of  1,134  from holding Pentair plc or generate 13.25% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Pentair plc  vs.  Glatfelter

Pentair plc

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Pentair plc are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, Pentair Plc reported solid returns over the last few months and may actually be approaching a breakup point.

Glatfelter

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Glatfelter are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Glatfelter is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Pentair Plc and Glatfelter

The main advantage of trading using opposite Pentair Plc and Glatfelter positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pentair Plc position performs unexpectedly, Glatfelter 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 Glatfelter will offset losses from the drop in Glatfelter's long position.

The idea behind Pentair plc and Glatfelter pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.