Correlation Between Evonik Industries and Ecolab
Can any of the company-specific risk be diversified away by investing in both Evonik Industries and Ecolab 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 Evonik Industries and Ecolab into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Evonik Industries AG and Ecolab Inc, you can compare the effects of market volatilities on Evonik Industries and Ecolab 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 Evonik Industries with a short position of Ecolab. Check out your portfolio center. Please also check ongoing floating volatility patterns of Evonik Industries and Ecolab.
Diversification Opportunities for Evonik Industries and Ecolab
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Evonik and Ecolab is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Evonik Industries AG and Ecolab Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ecolab Inc and Evonik Industries 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 Evonik Industries AG are associated (or correlated) with Ecolab. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ecolab Inc has no effect on the direction of Evonik Industries i.e., Evonik Industries and Ecolab go up and down completely randomly.
Pair Corralation between Evonik Industries and Ecolab
Assuming the 90 days horizon Evonik Industries AG is expected to under-perform the Ecolab. In addition to that, Evonik Industries is 2.69 times more volatile than Ecolab Inc. It trades about -0.08 of its total potential returns per unit of risk. Ecolab Inc is currently generating about -0.03 per unit of volatility. If you would invest 25,013 in Ecolab Inc on September 12, 2024 and sell it today you would lose (461.00) from holding Ecolab Inc or give up 1.84% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Evonik Industries AG vs. Ecolab Inc
Performance |
| Timeline |
| Evonik Industries |
| Ecolab Inc |
Evonik Industries and Ecolab Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Evonik Industries and Ecolab
The main advantage of trading using opposite Evonik Industries and Ecolab positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Evonik Industries position performs unexpectedly, Ecolab 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 Ecolab will offset losses from the drop in Ecolab's long position.| Evonik Industries vs. Symrise Ag PK | Evonik Industries vs. Fuchs Petrolub SE | Evonik Industries vs. Innospec | Evonik Industries vs. Air Liquide SA |
| Ecolab vs. LyondellBasell Industries NV | Ecolab vs. International Flavors Fragrances | Ecolab vs. Cabot | Ecolab vs. Westlake Chemical |
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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