Correlation Between Ecolab and Reynolds
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By analyzing existing cross correlation between Ecolab Inc and Reynolds American 725, you can compare the effects of market volatilities on Ecolab and Reynolds 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 Reynolds. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ecolab and Reynolds.
Diversification Opportunities for Ecolab and Reynolds
Weak diversification
The 3 months correlation between Ecolab and Reynolds is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Ecolab Inc and Reynolds American 725 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Reynolds American 725 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 Reynolds. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Reynolds American 725 has no effect on the direction of Ecolab i.e., Ecolab and Reynolds go up and down completely randomly.
Pair Corralation between Ecolab and Reynolds
Considering the 90-day investment horizon Ecolab Inc is expected to generate 0.52 times more return on investment than Reynolds. However, Ecolab Inc is 1.92 times less risky than Reynolds. It trades about 0.11 of its potential returns per unit of risk. Reynolds American 725 is currently generating about -0.08 per unit of risk. If you would invest 24,457 in Ecolab Inc on September 2, 2024 and sell it today you would earn a total of 420.00 from holding Ecolab Inc or generate 1.72% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.24% |
| Values | Daily Returns |
Ecolab Inc vs. Reynolds American 725
Performance |
| Timeline |
| Ecolab Inc |
| Reynolds American 725 |
Ecolab and Reynolds Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ecolab and Reynolds
The main advantage of trading using opposite Ecolab and Reynolds positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ecolab position performs unexpectedly, Reynolds 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 Reynolds will offset losses from the drop in Reynolds' long position.| Ecolab vs. Linde plc Ordinary | Ecolab vs. Air Products and | Ecolab vs. Aquagold International | Ecolab vs. Thrivent High Yield |
| Reynolds vs. Celsius Holdings | Reynolds vs. Diamond Estates Wines | Reynolds vs. Hudson Technologies | Reynolds vs. Ecolab Inc |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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