Correlation Between Ecolab and Arkema SA
Can any of the company-specific risk be diversified away by investing in both Ecolab and Arkema SA 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 Arkema SA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ecolab Inc and Arkema SA, you can compare the effects of market volatilities on Ecolab and Arkema SA 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 Arkema SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ecolab and Arkema SA.
Diversification Opportunities for Ecolab and Arkema SA
Very weak diversification
The 3 months correlation between Ecolab and Arkema is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Ecolab Inc and Arkema SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Arkema SA 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 Arkema SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Arkema SA has no effect on the direction of Ecolab i.e., Ecolab and Arkema SA go up and down completely randomly.
Pair Corralation between Ecolab and Arkema SA
If you would invest 24,951 in Ecolab Inc on December 5, 2024 and sell it today you would earn a total of 1,826 from holding Ecolab Inc or generate 7.32% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ecolab Inc vs. Arkema SA
Performance |
| Timeline |
| Ecolab Inc |
| Arkema SA |
Ecolab and Arkema SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ecolab and Arkema SA
The main advantage of trading using opposite Ecolab and Arkema SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ecolab position performs unexpectedly, Arkema SA 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 Arkema SA will offset losses from the drop in Arkema SA's long position.| Ecolab vs. Linde plc Ordinary | ||
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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 Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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