Correlation Between Franklin Electric and Pentair PLC
Can any of the company-specific risk be diversified away by investing in both Franklin Electric 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 Franklin Electric and Pentair PLC into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Franklin Electric Co and Pentair PLC, you can compare the effects of market volatilities on Franklin Electric 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 Franklin Electric with a short position of Pentair PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin Electric and Pentair PLC.
Diversification Opportunities for Franklin Electric and Pentair PLC
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Franklin and Pentair is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Electric Co and Pentair PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pentair PLC and Franklin Electric 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 Franklin Electric Co 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 Franklin Electric i.e., Franklin Electric and Pentair PLC go up and down completely randomly.
Pair Corralation between Franklin Electric and Pentair PLC
Given the investment horizon of 90 days Franklin Electric Co is expected to generate 1.06 times more return on investment than Pentair PLC. However, Franklin Electric is 1.06 times more volatile than Pentair PLC. It trades about 0.14 of its potential returns per unit of risk. Pentair PLC is currently generating about 0.13 per unit of risk. If you would invest 8,659 in Franklin Electric Co on June 9, 2025 and sell it today you would earn a total of 1,101 from holding Franklin Electric Co or generate 12.72% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Franklin Electric Co vs. Pentair PLC
Performance |
| Timeline |
| Franklin Electric |
| Pentair PLC |
Franklin Electric and Pentair PLC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Franklin Electric and Pentair PLC
The main advantage of trading using opposite Franklin Electric and Pentair PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin Electric 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.| Franklin Electric vs. IDEX Corporation | Franklin Electric vs. Watts Water Technologies | Franklin Electric vs. Donaldson | Franklin Electric vs. Gorman Rupp |
| Pentair PLC vs. Illinois Tool Works | Pentair PLC vs. Parker Hannifin | Pentair PLC vs. Emerson Electric | Pentair PLC vs. Smith AO |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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