Correlation Between Ecolab and Aegon NV
Can any of the company-specific risk be diversified away by investing in both Ecolab and Aegon NV 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 Aegon NV into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ecolab Inc and Aegon NV ADR, you can compare the effects of market volatilities on Ecolab and Aegon NV 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 Aegon NV. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ecolab and Aegon NV.
Diversification Opportunities for Ecolab and Aegon NV
Average diversification
The 3 months correlation between Ecolab and Aegon is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding Ecolab Inc and Aegon NV ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aegon NV ADR 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 Aegon NV. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aegon NV ADR has no effect on the direction of Ecolab i.e., Ecolab and Aegon NV go up and down completely randomly.
Pair Corralation between Ecolab and Aegon NV
Considering the 90-day investment horizon Ecolab Inc is expected to generate 0.79 times more return on investment than Aegon NV. However, Ecolab Inc is 1.27 times less risky than Aegon NV. It trades about 0.09 of its potential returns per unit of risk. Aegon NV ADR is currently generating about 0.05 per unit of risk. If you would invest 14,924 in Ecolab Inc on September 3, 2024 and sell it today you would earn a total of 9,953 from holding Ecolab Inc or generate 66.69% 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. Aegon NV ADR
Performance |
| Timeline |
| Ecolab Inc |
| Aegon NV ADR |
Ecolab and Aegon NV Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ecolab and Aegon NV
The main advantage of trading using opposite Ecolab and Aegon NV positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ecolab position performs unexpectedly, Aegon NV 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 Aegon NV will offset losses from the drop in Aegon NV's long position.| Ecolab vs. Linde plc Ordinary | Ecolab vs. PPG Industries | Ecolab vs. Sherwin Williams Co | Ecolab vs. LyondellBasell Industries NV |
| Aegon NV vs. Global Indemnity PLC | Aegon NV vs. Erie Indemnity | Aegon NV vs. AMERISAFE | Aegon NV vs. Diamond Hill Investment |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
Other Complementary Tools
| Risk-Return Analysis View associations between returns expected from investment and the risk you assume | |
| Insider Screener Find insiders across different sectors to evaluate their impact on performance | |
| Portfolio Backtesting Avoid under-diversification and over-optimization by backtesting your portfolios | |
| Bond Analysis Evaluate and analyze corporate bonds as a potential investment for your portfolios. | |
| Bollinger Bands Use Bollinger Bands indicator to analyze target price for a given investing horizon |