Correlation Between Black Hills and Ecolab
Can any of the company-specific risk be diversified away by investing in both Black Hills 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 Black Hills and Ecolab into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Black Hills and Ecolab Inc, you can compare the effects of market volatilities on Black Hills 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 Black Hills with a short position of Ecolab. Check out your portfolio center. Please also check ongoing floating volatility patterns of Black Hills and Ecolab.
Diversification Opportunities for Black Hills and Ecolab
-0.14 | Correlation Coefficient |
Good diversification
The 3 months correlation between Black and Ecolab is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding Black Hills and Ecolab Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ecolab Inc and Black Hills 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 Black Hills 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 Black Hills i.e., Black Hills and Ecolab go up and down completely randomly.
Pair Corralation between Black Hills and Ecolab
Considering the 90-day investment horizon Black Hills is expected to generate 1.29 times more return on investment than Ecolab. However, Black Hills is 1.29 times more volatile than Ecolab Inc. It trades about 0.13 of its potential returns per unit of risk. Ecolab Inc is currently generating about 0.01 per unit of risk. If you would invest 5,855 in Black Hills on September 2, 2024 and sell it today you would earn a total of 552.00 from holding Black Hills or generate 9.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Black Hills vs. Ecolab Inc
Performance |
| Timeline |
| Black Hills |
| Ecolab Inc |
Black Hills and Ecolab Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Black Hills and Ecolab
The main advantage of trading using opposite Black Hills and Ecolab positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Black Hills 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.| Black Hills vs. NorthWestern | Black Hills vs. Avista | Black Hills vs. Otter Tail | Black Hills vs. Companhia Paranaense de |
| Ecolab vs. Linde plc Ordinary | Ecolab vs. Air Products and | Ecolab vs. Aquagold International | Ecolab vs. Thrivent High Yield |
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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
Other Complementary Tools
| Portfolio File Import Quickly import all of your third-party portfolios from your local drive in csv format | |
| Portfolio Rebalancing Analyze risk-adjusted returns against different time horizons to find asset-allocation targets | |
| Price Transformation Use Price Transformation models to analyze the depth of different equity instruments across global markets | |
| USA ETFs Find actively traded Exchange Traded Funds (ETF) in USA | |
| Portfolio Optimization Compute new portfolio that will generate highest expected return given your specified tolerance for risk |