Correlation Between Kronos Worldwide and Ecolab
Can any of the company-specific risk be diversified away by investing in both Kronos Worldwide 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 Kronos Worldwide and Ecolab into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Kronos Worldwide and Ecolab Inc, you can compare the effects of market volatilities on Kronos Worldwide 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 Kronos Worldwide with a short position of Ecolab. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kronos Worldwide and Ecolab.
Diversification Opportunities for Kronos Worldwide and Ecolab
0.42 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Kronos and Ecolab is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Kronos Worldwide and Ecolab Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ecolab Inc and Kronos Worldwide 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 Kronos Worldwide 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 Kronos Worldwide i.e., Kronos Worldwide and Ecolab go up and down completely randomly.
Pair Corralation between Kronos Worldwide and Ecolab
Considering the 90-day investment horizon Kronos Worldwide is expected to generate 2.77 times more return on investment than Ecolab. However, Kronos Worldwide is 2.77 times more volatile than Ecolab Inc. It trades about 0.02 of its potential returns per unit of risk. Ecolab Inc is currently generating about -0.11 per unit of risk. If you would invest 1,138 in Kronos Worldwide on August 30, 2024 and sell it today you would earn a total of 8.00 from holding Kronos Worldwide or generate 0.7% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Kronos Worldwide vs. Ecolab Inc
Performance |
| Timeline |
| Kronos Worldwide |
| Ecolab Inc |
Kronos Worldwide and Ecolab Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kronos Worldwide and Ecolab
The main advantage of trading using opposite Kronos Worldwide and Ecolab positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kronos Worldwide 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.| Kronos Worldwide vs. Oil Dri | Kronos Worldwide vs. Quaker Chemical | Kronos Worldwide vs. Ecovyst | Kronos Worldwide vs. Minerals Technologies |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
Other Complementary Tools
| Earnings Calls Check upcoming earnings announcements updated hourly across public exchanges | |
| Commodity Channel Use Commodity Channel Index to analyze current equity momentum | |
| Pattern Recognition Use different Pattern Recognition models to time the market across multiple global exchanges | |
| Idea Analyzer Analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas | |
| Bollinger Bands Use Bollinger Bands indicator to analyze target price for a given investing horizon |