Correlation Between Park Electrochemical and Ecolab
Can any of the company-specific risk be diversified away by investing in both Park Electrochemical 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 Park Electrochemical and Ecolab into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Park Electrochemical and Ecolab Inc, you can compare the effects of market volatilities on Park Electrochemical 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 Park Electrochemical with a short position of Ecolab. Check out your portfolio center. Please also check ongoing floating volatility patterns of Park Electrochemical and Ecolab.
Diversification Opportunities for Park Electrochemical and Ecolab
-0.1 | Correlation Coefficient |
Good diversification
The 3 months correlation between Park and Ecolab is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding Park Electrochemical and Ecolab Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ecolab Inc and Park Electrochemical 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 Park Electrochemical 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 Park Electrochemical i.e., Park Electrochemical and Ecolab go up and down completely randomly.
Pair Corralation between Park Electrochemical and Ecolab
Considering the 90-day investment horizon Park Electrochemical is expected to under-perform the Ecolab. But the stock apears to be less risky and, when comparing its historical volatility, Park Electrochemical is 1.08 times less risky than Ecolab. The stock trades about -0.23 of its potential returns per unit of risk. The Ecolab Inc is currently generating about 0.24 of returns per unit of risk over similar time horizon. If you would invest 24,620 in Ecolab Inc on November 28, 2024 and sell it today you would earn a total of 2,027 from holding Ecolab Inc or generate 8.23% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Park Electrochemical vs. Ecolab Inc
Performance |
| Timeline |
| Park Electrochemical |
| Ecolab Inc |
Park Electrochemical and Ecolab Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Park Electrochemical and Ecolab
The main advantage of trading using opposite Park Electrochemical and Ecolab positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Park Electrochemical 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.| Park Electrochemical vs. Innovative Solutions and | Park Electrochemical vs. VSE Corporation | Park Electrochemical vs. Curtiss Wright | Park Electrochemical vs. Ducommun Incorporated |
| Ecolab vs. Linde plc Ordinary | Ecolab vs. PPG Industries | Ecolab vs. Sherwin Williams Co | Ecolab vs. LyondellBasell Industries NV |
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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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