Correlation Between Ecolab and Roma Green
Can any of the company-specific risk be diversified away by investing in both Ecolab and Roma Green 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 Roma Green into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ecolab Inc and Roma Green Finance, you can compare the effects of market volatilities on Ecolab and Roma Green 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 Roma Green. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ecolab and Roma Green.
Diversification Opportunities for Ecolab and Roma Green
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Ecolab and Roma is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Ecolab Inc and Roma Green Finance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Roma Green Finance 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 Roma Green. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Roma Green Finance has no effect on the direction of Ecolab i.e., Ecolab and Roma Green go up and down completely randomly.
Pair Corralation between Ecolab and Roma Green
Considering the 90-day investment horizon Ecolab Inc is expected to generate 0.13 times more return on investment than Roma Green. However, Ecolab Inc is 7.77 times less risky than Roma Green. It trades about 0.08 of its potential returns per unit of risk. Roma Green Finance is currently generating about 0.0 per unit of risk. If you would invest 15,235 in Ecolab Inc on October 23, 2024 and sell it today you would earn a total of 8,810 from holding Ecolab Inc or generate 57.83% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 52.53% |
| Values | Daily Returns |
Ecolab Inc vs. Roma Green Finance
Performance |
| Timeline |
| Ecolab Inc |
| Roma Green Finance |
Ecolab and Roma Green Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ecolab and Roma Green
The main advantage of trading using opposite Ecolab and Roma Green positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ecolab position performs unexpectedly, Roma Green 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 Roma Green will offset losses from the drop in Roma Green's long position.| Ecolab vs. Linde plc Ordinary | Ecolab vs. PPG Industries | Ecolab vs. Sherwin Williams Co | Ecolab vs. LyondellBasell Industries NV |
| Roma Green vs. Boston Beer | Roma Green vs. RadNet Inc | Roma Green vs. Japan Tobacco ADR | Roma Green vs. Catalyst Pharmaceuticals |
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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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