Correlation Between Sligro Food and Ecolab
Can any of the company-specific risk be diversified away by investing in both Sligro Food 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 Sligro Food and Ecolab into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sligro Food Group and Ecolab Inc, you can compare the effects of market volatilities on Sligro Food 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 Sligro Food with a short position of Ecolab. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sligro Food and Ecolab.
Diversification Opportunities for Sligro Food and Ecolab
0.59 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Sligro and Ecolab is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Sligro Food Group and Ecolab Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ecolab Inc and Sligro Food 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 Sligro Food Group 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 Sligro Food i.e., Sligro Food and Ecolab go up and down completely randomly.
Pair Corralation between Sligro Food and Ecolab
Assuming the 90 days horizon Sligro Food Group is expected to under-perform the Ecolab. In addition to that, Sligro Food is 1.05 times more volatile than Ecolab Inc. It trades about -0.06 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 14,924 in Ecolab Inc on September 3, 2024 and sell it today you would earn a total of 9,953 from holding Ecolab Inc or generate 66.69% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 87.68% |
| Values | Daily Returns |
Sligro Food Group vs. Ecolab Inc
Performance |
| Timeline |
| Sligro Food Group |
| Ecolab Inc |
Sligro Food and Ecolab Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sligro Food and Ecolab
The main advantage of trading using opposite Sligro Food and Ecolab positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sligro Food 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.| Sligro Food vs. Legacy Education | Sligro Food vs. Apple Inc | Sligro Food vs. NVIDIA | Sligro Food vs. Microsoft |
| 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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