Correlation Between IMCD NV and Ecolab
Can any of the company-specific risk be diversified away by investing in both IMCD NV 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 IMCD NV and Ecolab into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between IMCD NV and Ecolab Inc, you can compare the effects of market volatilities on IMCD NV 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 IMCD NV with a short position of Ecolab. Check out your portfolio center. Please also check ongoing floating volatility patterns of IMCD NV and Ecolab.
Diversification Opportunities for IMCD NV and Ecolab
Poor diversification
The 3 months correlation between IMCD and Ecolab is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding IMCD NV and Ecolab Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ecolab Inc and IMCD NV 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 IMCD NV 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 IMCD NV i.e., IMCD NV and Ecolab go up and down completely randomly.
Pair Corralation between IMCD NV and Ecolab
Assuming the 90 days horizon IMCD NV is expected to generate 3.04 times less return on investment than Ecolab. In addition to that, IMCD NV is 2.27 times more volatile than Ecolab Inc. It trades about 0.01 of its total potential returns per unit of risk. Ecolab Inc is currently generating about 0.09 per unit of volatility. If you would invest 14,450 in Ecolab Inc on September 19, 2024 and sell it today you would earn a total of 10,167 from holding Ecolab Inc or generate 70.36% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 64.24% |
| Values | Daily Returns |
IMCD NV vs. Ecolab Inc
Performance |
| Timeline |
| IMCD NV |
| Ecolab Inc |
IMCD NV and Ecolab Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IMCD NV and Ecolab
The main advantage of trading using opposite IMCD NV and Ecolab positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IMCD NV 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.| IMCD NV vs. Air Products and | IMCD NV vs. PPG Industries | IMCD NV vs. Sherwin Williams Co | IMCD NV vs. Ecolab Inc |
| Ecolab vs. LyondellBasell Industries NV | Ecolab vs. Cabot | Ecolab vs. Westlake Chemical | Ecolab vs. Air Products and |
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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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