Correlation Between Ecolab and TPG Telecom
Can any of the company-specific risk be diversified away by investing in both Ecolab and TPG Telecom 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 TPG Telecom into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ecolab Inc and TPG Telecom Limited, you can compare the effects of market volatilities on Ecolab and TPG Telecom 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 TPG Telecom. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ecolab and TPG Telecom.
Diversification Opportunities for Ecolab and TPG Telecom
-0.63 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Ecolab and TPG is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding Ecolab Inc and TPG Telecom Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TPG Telecom Limited 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 TPG Telecom. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TPG Telecom Limited has no effect on the direction of Ecolab i.e., Ecolab and TPG Telecom go up and down completely randomly.
Pair Corralation between Ecolab and TPG Telecom
Considering the 90-day investment horizon Ecolab Inc is expected to generate 0.47 times more return on investment than TPG Telecom. However, Ecolab Inc is 2.13 times less risky than TPG Telecom. It trades about 0.09 of its potential returns per unit of risk. TPG Telecom Limited is currently generating about -0.13 per unit of risk. If you would invest 24,705 in Ecolab Inc on November 27, 2024 and sell it today you would earn a total of 1,676 from holding Ecolab Inc or generate 6.78% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ecolab Inc vs. TPG Telecom Limited
Performance |
| Timeline |
| Ecolab Inc |
| TPG Telecom Limited |
Ecolab and TPG Telecom Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ecolab and TPG Telecom
The main advantage of trading using opposite Ecolab and TPG Telecom positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ecolab position performs unexpectedly, TPG Telecom 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 TPG Telecom will offset losses from the drop in TPG Telecom's long position.| Ecolab vs. Linde plc Ordinary | Ecolab vs. PPG Industries | Ecolab vs. Sherwin Williams Co | Ecolab vs. LyondellBasell Industries NV |
| TPG Telecom vs. MagnaChip Semiconductor | TPG Telecom vs. HNI Corp | TPG Telecom vs. Elmos Semiconductor SE | TPG Telecom vs. Teradyne |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
Other Complementary Tools
| Pair Correlation Compare performance and examine fundamental relationship between any two equity instruments | |
| Odds Of Bankruptcy Get analysis of equity chance of financial distress in the next 2 years | |
| Sync Your Broker Sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors. | |
| Price Exposure Probability Analyze equity upside and downside potential for a given time horizon across multiple markets | |
| Money Flow Index Determine momentum by analyzing Money Flow Index and other technical indicators |