Correlation Between Ecolab and NEO PERFORMMAT
Can any of the company-specific risk be diversified away by investing in both Ecolab and NEO PERFORMMAT 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 Ecolab and NEO PERFORMMAT into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ecolab Inc and NEO PERFORMMAT, you can compare the effects of market volatilities on Ecolab and NEO PERFORMMAT 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 Ecolab with a short position of NEO PERFORMMAT. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ecolab and NEO PERFORMMAT.
Diversification Opportunities for Ecolab and NEO PERFORMMAT
0.16 | Correlation Coefficient |
Average diversification
The 3 months correlation between Ecolab and NEO is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding Ecolab Inc and NEO PERFORMMAT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NEO PERFORMMAT and Ecolab 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 Ecolab Inc are associated (or correlated) with NEO PERFORMMAT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NEO PERFORMMAT has no effect on the direction of Ecolab i.e., Ecolab and NEO PERFORMMAT go up and down completely randomly.
Pair Corralation between Ecolab and NEO PERFORMMAT
Assuming the 90 days horizon Ecolab Inc is expected to generate 0.44 times more return on investment than NEO PERFORMMAT. However, Ecolab Inc is 2.25 times less risky than NEO PERFORMMAT. It trades about 0.09 of its potential returns per unit of risk. NEO PERFORMMAT is currently generating about 0.0 per unit of risk. If you would invest 13,873 in Ecolab Inc on September 26, 2024 and sell it today you would earn a total of 9,007 from holding Ecolab Inc or generate 64.92% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ecolab Inc vs. NEO PERFORMMAT
Performance |
| Timeline |
| Ecolab Inc |
| NEO PERFORMMAT |
Ecolab and NEO PERFORMMAT Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ecolab and NEO PERFORMMAT
The main advantage of trading using opposite Ecolab and NEO PERFORMMAT positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ecolab position performs unexpectedly, NEO PERFORMMAT 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 NEO PERFORMMAT will offset losses from the drop in NEO PERFORMMAT's long position.| Ecolab vs. Linde PLC | Ecolab vs. Air Liquide SA | Ecolab vs. The Sherwin Williams | Ecolab vs. Dupont De Nemours |
| NEO PERFORMMAT vs. Linde PLC | NEO PERFORMMAT vs. Air Liquide SA | NEO PERFORMMAT vs. The Sherwin Williams | NEO PERFORMMAT vs. Ecolab Inc |
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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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