Correlation Between Ecolab and Hawkins
Can any of the company-specific risk be diversified away by investing in both Ecolab and Hawkins 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 Hawkins into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ecolab Inc and Hawkins, you can compare the effects of market volatilities on Ecolab and Hawkins 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 Hawkins. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ecolab and Hawkins.
Diversification Opportunities for Ecolab and Hawkins
Excellent diversification
The 3 months correlation between Ecolab and Hawkins is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding Ecolab Inc and Hawkins in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hawkins 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 Hawkins. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hawkins has no effect on the direction of Ecolab i.e., Ecolab and Hawkins go up and down completely randomly.
Pair Corralation between Ecolab and Hawkins
Considering the 90-day investment horizon Ecolab Inc is expected to generate 0.48 times more return on investment than Hawkins. However, Ecolab Inc is 2.08 times less risky than Hawkins. It trades about -0.11 of its potential returns per unit of risk. Hawkins is currently generating about -0.15 per unit of risk. If you would invest 26,123 in Ecolab Inc on December 13, 2024 and sell it today you would lose (605.00) from holding Ecolab Inc or give up 2.32% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ecolab Inc vs. Hawkins
Performance |
| Timeline |
| Ecolab Inc |
| Hawkins |
Ecolab and Hawkins Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ecolab and Hawkins
The main advantage of trading using opposite Ecolab and Hawkins positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ecolab position performs unexpectedly, Hawkins 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 Hawkins will offset losses from the drop in Hawkins' 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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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