Correlation Between Ecolab and QBE Insurance
Can any of the company-specific risk be diversified away by investing in both Ecolab and QBE Insurance 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 QBE Insurance into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ecolab Inc and QBE Insurance Group, you can compare the effects of market volatilities on Ecolab and QBE Insurance 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 QBE Insurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ecolab and QBE Insurance.
Diversification Opportunities for Ecolab and QBE Insurance
-0.35 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Ecolab and QBE is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding Ecolab Inc and QBE Insurance Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on QBE Insurance Group 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 QBE Insurance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of QBE Insurance Group has no effect on the direction of Ecolab i.e., Ecolab and QBE Insurance go up and down completely randomly.
Pair Corralation between Ecolab and QBE Insurance
Considering the 90-day investment horizon Ecolab Inc is expected to generate 0.55 times more return on investment than QBE Insurance. However, Ecolab Inc is 1.81 times less risky than QBE Insurance. It trades about 0.06 of its potential returns per unit of risk. QBE Insurance Group is currently generating about 0.0 per unit of risk. If you would invest 22,575 in Ecolab Inc on September 3, 2024 and sell it today you would earn a total of 2,302 from holding Ecolab Inc or generate 10.2% 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. QBE Insurance Group
Performance |
| Timeline |
| Ecolab Inc |
| QBE Insurance Group |
Ecolab and QBE Insurance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ecolab and QBE Insurance
The main advantage of trading using opposite Ecolab and QBE Insurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ecolab position performs unexpectedly, QBE Insurance 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 QBE Insurance will offset losses from the drop in QBE Insurance's long position.| Ecolab vs. Linde plc Ordinary | Ecolab vs. PPG Industries | Ecolab vs. Sherwin Williams Co | Ecolab vs. LyondellBasell Industries NV |
| QBE Insurance vs. AmTrust Financial Services | QBE Insurance vs. AmTrust Financial Services | QBE Insurance vs. AmTrust Financial Services | QBE Insurance vs. AmTrust Financial Services |
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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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