Correlation Between Aptiv PLC and Ecolab
Can any of the company-specific risk be diversified away by investing in both Aptiv PLC and Ecolab 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 Aptiv PLC and Ecolab into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Aptiv PLC and Ecolab Inc, you can compare the effects of market volatilities on Aptiv PLC and Ecolab 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 Aptiv PLC with a short position of Ecolab. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aptiv PLC and Ecolab.
Diversification Opportunities for Aptiv PLC and Ecolab
Significant diversification
The 3 months correlation between Aptiv and Ecolab is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding Aptiv PLC and Ecolab Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ecolab Inc and Aptiv 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 Aptiv PLC are associated (or correlated) with Ecolab. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ecolab Inc has no effect on the direction of Aptiv PLC i.e., Aptiv PLC and Ecolab go up and down completely randomly.
Pair Corralation between Aptiv PLC and Ecolab
Given the investment horizon of 90 days Aptiv PLC is expected to generate 2.38 times less return on investment than Ecolab. In addition to that, Aptiv PLC is 1.18 times more volatile than Ecolab Inc. It trades about 0.12 of its total potential returns per unit of risk. Ecolab Inc is currently generating about 0.35 per unit of volatility. If you would invest 23,193 in Ecolab Inc on November 4, 2024 and sell it today you would earn a total of 1,826 from holding Ecolab Inc or generate 7.87% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Aptiv PLC vs. Ecolab Inc
Performance |
| Timeline |
| Aptiv PLC |
| Ecolab Inc |
Aptiv PLC and Ecolab Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aptiv PLC and Ecolab
The main advantage of trading using opposite Aptiv PLC and Ecolab positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aptiv PLC position performs unexpectedly, Ecolab 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 Ecolab will offset losses from the drop in Ecolab's long position.| Aptiv PLC vs. Allison Transmission Holdings | Aptiv PLC vs. LKQ Corporation | Aptiv PLC vs. Lear Corporation | Aptiv PLC vs. Magna International |
| Ecolab vs. Linde plc Ordinary | Ecolab vs. PPG Industries | Ecolab vs. Sherwin Williams Co | Ecolab vs. LyondellBasell Industries NV |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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