Correlation Between Chemours and Ecolab
Can any of the company-specific risk be diversified away by investing in both Chemours 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 Chemours and Ecolab into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Chemours Co and Ecolab Inc, you can compare the effects of market volatilities on Chemours 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 Chemours with a short position of Ecolab. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chemours and Ecolab.
Diversification Opportunities for Chemours and Ecolab
Very weak diversification
The 3 months correlation between Chemours and Ecolab is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Chemours Co and Ecolab Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ecolab Inc and Chemours 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 Chemours Co 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 Chemours i.e., Chemours and Ecolab go up and down completely randomly.
Pair Corralation between Chemours and Ecolab
Allowing for the 90-day total investment horizon Chemours Co is expected to generate 2.84 times more return on investment than Ecolab. However, Chemours is 2.84 times more volatile than Ecolab Inc. It trades about 0.22 of its potential returns per unit of risk. Ecolab Inc is currently generating about 0.35 per unit of risk. If you would invest 1,669 in Chemours Co on November 4, 2024 and sell it today you would earn a total of 230.00 from holding Chemours Co or generate 13.78% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Chemours Co vs. Ecolab Inc
Performance |
| Timeline |
| Chemours |
| Ecolab Inc |
Chemours and Ecolab Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Chemours and Ecolab
The main advantage of trading using opposite Chemours and Ecolab positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chemours 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.| Chemours vs. International Flavors Fragrances | Chemours vs. Air Products and | Chemours vs. PPG Industries | Chemours vs. Linde plc Ordinary |
| 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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