Correlation Between Danimer Scientific and Ecolab
Can any of the company-specific risk be diversified away by investing in both Danimer Scientific 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 Danimer Scientific and Ecolab into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Danimer Scientific and Ecolab Inc, you can compare the effects of market volatilities on Danimer Scientific 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 Danimer Scientific with a short position of Ecolab. Check out your portfolio center. Please also check ongoing floating volatility patterns of Danimer Scientific and Ecolab.
Diversification Opportunities for Danimer Scientific and Ecolab
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Danimer and Ecolab is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Danimer Scientific and Ecolab Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ecolab Inc and Danimer Scientific 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 Danimer Scientific 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 Danimer Scientific i.e., Danimer Scientific and Ecolab go up and down completely randomly.
Pair Corralation between Danimer Scientific and Ecolab
Given the investment horizon of 90 days Danimer Scientific is expected to under-perform the Ecolab. In addition to that, Danimer Scientific is 8.41 times more volatile than Ecolab Inc. It trades about -0.63 of its total potential returns per unit of risk. Ecolab Inc is currently generating about -0.18 per unit of volatility. If you would invest 25,645 in Ecolab Inc on August 27, 2024 and sell it today you would lose (953.00) from holding Ecolab Inc or give up 3.72% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Danimer Scientific vs. Ecolab Inc
Performance |
| Timeline |
| Danimer Scientific |
| Ecolab Inc |
Danimer Scientific and Ecolab Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Danimer Scientific and Ecolab
The main advantage of trading using opposite Danimer Scientific and Ecolab positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Danimer Scientific 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.| Danimer Scientific vs. LyondellBasell Industries NV | Danimer Scientific vs. International Flavors Fragrances | Danimer Scientific vs. Cabot | Danimer Scientific vs. Westlake Chemical |
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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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