Correlation Between Ecolab and Green Star
Can any of the company-specific risk be diversified away by investing in both Ecolab and Green Star 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 Green Star into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ecolab Inc and Green Star Products, you can compare the effects of market volatilities on Ecolab and Green Star 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 Green Star. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ecolab and Green Star.
Diversification Opportunities for Ecolab and Green Star
-0.17 | Correlation Coefficient |
Good diversification
The 3 months correlation between Ecolab and Green is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding Ecolab Inc and Green Star Products in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Green Star Products 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 Green Star. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Green Star Products has no effect on the direction of Ecolab i.e., Ecolab and Green Star go up and down completely randomly.
Pair Corralation between Ecolab and Green Star
Considering the 90-day investment horizon Ecolab is expected to generate 13.92 times less return on investment than Green Star. But when comparing it to its historical volatility, Ecolab Inc is 12.09 times less risky than Green Star. It trades about 0.05 of its potential returns per unit of risk. Green Star Products is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 0.13 in Green Star Products on September 1, 2024 and sell it today you would lose (0.02) from holding Green Star Products or give up 15.38% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ecolab Inc vs. Green Star Products
Performance |
| Timeline |
| Ecolab Inc |
| Green Star Products |
Ecolab and Green Star Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ecolab and Green Star
The main advantage of trading using opposite Ecolab and Green Star positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ecolab position performs unexpectedly, Green Star 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 Green Star will offset losses from the drop in Green Star's long position.| Ecolab vs. Linde plc Ordinary | Ecolab vs. Air Products and | Ecolab vs. Aquagold International | Ecolab vs. Thrivent High Yield |
| Green Star vs. Sherwin Williams Co | Green Star vs. Air Liquide SA | Green Star vs. Air Products and | Green Star 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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