Correlation Between Ecolab and Sligro Food
Can any of the company-specific risk be diversified away by investing in both Ecolab and Sligro Food 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 Sligro Food into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ecolab Inc and Sligro Food Group, you can compare the effects of market volatilities on Ecolab and Sligro Food 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 Sligro Food. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ecolab and Sligro Food.
Diversification Opportunities for Ecolab and Sligro Food
0.55 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Ecolab and Sligro is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Ecolab Inc and Sligro Food Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sligro Food 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 Sligro Food. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sligro Food Group has no effect on the direction of Ecolab i.e., Ecolab and Sligro Food go up and down completely randomly.
Pair Corralation between Ecolab and Sligro Food
Considering the 90-day investment horizon Ecolab Inc is expected to generate 0.96 times more return on investment than Sligro Food. However, Ecolab Inc is 1.05 times less risky than Sligro Food. It trades about 0.09 of its potential returns per unit of risk. Sligro Food Group is currently generating about -0.06 per unit of risk. If you would invest 14,701 in Ecolab Inc on September 4, 2024 and sell it today you would earn a total of 10,144 from holding Ecolab Inc or generate 69.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 87.68% |
| Values | Daily Returns |
Ecolab Inc vs. Sligro Food Group
Performance |
| Timeline |
| Ecolab Inc |
| Sligro Food Group |
Ecolab and Sligro Food Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ecolab and Sligro Food
The main advantage of trading using opposite Ecolab and Sligro Food positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ecolab position performs unexpectedly, Sligro Food 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 Sligro Food will offset losses from the drop in Sligro Food's long position.The idea behind Ecolab Inc and Sligro Food Group pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Sligro Food vs. Entegris | Sligro Food vs. Playtech plc | Sligro Food vs. Everspin Technologies | Sligro Food vs. MACOM Technology Solutions |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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