Correlation Between Ecolab and Mosaic
Can any of the company-specific risk be diversified away by investing in both Ecolab and Mosaic 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 Mosaic into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ecolab Inc and The Mosaic, you can compare the effects of market volatilities on Ecolab and Mosaic 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 Mosaic. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ecolab and Mosaic.
Diversification Opportunities for Ecolab and Mosaic
Good diversification
The 3 months correlation between Ecolab and Mosaic is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding Ecolab Inc and The Mosaic in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mosaic 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 Mosaic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mosaic has no effect on the direction of Ecolab i.e., Ecolab and Mosaic go up and down completely randomly.
Pair Corralation between Ecolab and Mosaic
Considering the 90-day investment horizon Ecolab Inc is expected to generate 0.42 times more return on investment than Mosaic. However, Ecolab Inc is 2.39 times less risky than Mosaic. It trades about -0.07 of its potential returns per unit of risk. The Mosaic is currently generating about -0.03 per unit of risk. If you would invest 25,533 in Ecolab Inc on August 30, 2024 and sell it today you would lose (763.00) from holding Ecolab Inc or give up 2.99% 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. The Mosaic
Performance |
| Timeline |
| Ecolab Inc |
| Mosaic |
Ecolab and Mosaic Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ecolab and Mosaic
The main advantage of trading using opposite Ecolab and Mosaic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ecolab position performs unexpectedly, Mosaic 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 Mosaic will offset losses from the drop in Mosaic's long position.| Ecolab vs. Linde plc Ordinary | Ecolab vs. PPG Industries | Ecolab vs. Sherwin Williams Co | Ecolab vs. LyondellBasell Industries NV |
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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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