Correlation Between Ecolab and Emerson Radio
Can any of the company-specific risk be diversified away by investing in both Ecolab and Emerson Radio 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 Emerson Radio into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ecolab Inc and Emerson Radio, you can compare the effects of market volatilities on Ecolab and Emerson Radio 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 Emerson Radio. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ecolab and Emerson Radio.
Diversification Opportunities for Ecolab and Emerson Radio
-0.01 | Correlation Coefficient |
Good diversification
The 3 months correlation between Ecolab and Emerson is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding Ecolab Inc and Emerson Radio in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Emerson Radio 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 Emerson Radio. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Emerson Radio has no effect on the direction of Ecolab i.e., Ecolab and Emerson Radio go up and down completely randomly.
Pair Corralation between Ecolab and Emerson Radio
Considering the 90-day investment horizon Ecolab Inc is expected to generate 0.33 times more return on investment than Emerson Radio. However, Ecolab Inc is 3.03 times less risky than Emerson Radio. It trades about 0.08 of its potential returns per unit of risk. Emerson Radio is currently generating about 0.0 per unit of risk. If you would invest 19,711 in Ecolab Inc on November 9, 2024 and sell it today you would earn a total of 5,292 from holding Ecolab Inc or generate 26.85% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ecolab Inc vs. Emerson Radio
Performance |
| Timeline |
| Ecolab Inc |
| Emerson Radio |
Ecolab and Emerson Radio Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ecolab and Emerson Radio
The main advantage of trading using opposite Ecolab and Emerson Radio positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ecolab position performs unexpectedly, Emerson Radio 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 Emerson Radio will offset losses from the drop in Emerson Radio's long position.| Ecolab vs. Linde plc Ordinary | Ecolab vs. PPG Industries | Ecolab vs. Sherwin Williams Co | Ecolab vs. LyondellBasell Industries NV |
| Emerson Radio vs. VOXX International | Emerson Radio vs. LG Display Co | Emerson Radio vs. Koss Corporation | Emerson Radio vs. Wearable Devices |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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