Correlation Between Ecolab and MSP Recovery
Can any of the company-specific risk be diversified away by investing in both Ecolab and MSP Recovery 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 MSP Recovery into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ecolab Inc and MSP Recovery, you can compare the effects of market volatilities on Ecolab and MSP Recovery 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 MSP Recovery. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ecolab and MSP Recovery.
Diversification Opportunities for Ecolab and MSP Recovery
0.33 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Ecolab and MSP is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Ecolab Inc and MSP Recovery in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MSP Recovery 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 MSP Recovery. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MSP Recovery has no effect on the direction of Ecolab i.e., Ecolab and MSP Recovery go up and down completely randomly.
Pair Corralation between Ecolab and MSP Recovery
Considering the 90-day investment horizon Ecolab Inc is expected to generate 0.17 times more return on investment than MSP Recovery. However, Ecolab Inc is 5.77 times less risky than MSP Recovery. It trades about 0.05 of its potential returns per unit of risk. MSP Recovery is currently generating about -0.24 per unit of risk. If you would invest 23,185 in Ecolab Inc on September 1, 2024 and sell it today you would earn a total of 1,692 from holding Ecolab Inc or generate 7.3% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ecolab Inc vs. MSP Recovery
Performance |
| Timeline |
| Ecolab Inc |
| MSP Recovery |
Ecolab and MSP Recovery Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ecolab and MSP Recovery
The main advantage of trading using opposite Ecolab and MSP Recovery positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ecolab position performs unexpectedly, MSP Recovery 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 MSP Recovery will offset losses from the drop in MSP Recovery's long position.| Ecolab vs. Linde plc Ordinary | Ecolab vs. Air Products and | Ecolab vs. Aquagold International | Ecolab vs. Thrivent High Yield |
| MSP Recovery vs. Profound Medical Corp | MSP Recovery vs. Si Bone | MSP Recovery vs. Nevro Corp | MSP Recovery vs. Paragon 28 |
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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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