Correlation Between Ecolab and Allkem
Can any of the company-specific risk be diversified away by investing in both Ecolab and Allkem 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 Allkem into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ecolab Inc and Allkem, you can compare the effects of market volatilities on Ecolab and Allkem 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 Allkem. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ecolab and Allkem.
Diversification Opportunities for Ecolab and Allkem
Pay attention - limited upside
The 3 months correlation between Ecolab and Allkem is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Ecolab Inc and Allkem in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Allkem 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 Allkem. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Allkem has no effect on the direction of Ecolab i.e., Ecolab and Allkem go up and down completely randomly.
Pair Corralation between Ecolab and Allkem
If you would invest 24,620 in Ecolab Inc on November 27, 2024 and sell it today you would earn a total of 1,761 from holding Ecolab Inc or generate 7.15% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 0.0% |
| Values | Daily Returns |
Ecolab Inc vs. Allkem
Performance |
| Timeline |
| Ecolab Inc |
| Allkem |
Risk-Adjusted Performance
Very Weak
Weak | Strong |
Ecolab and Allkem Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ecolab and Allkem
The main advantage of trading using opposite Ecolab and Allkem positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ecolab position performs unexpectedly, Allkem 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 Allkem will offset losses from the drop in Allkem'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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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