Correlation Between ATT and ECOLAB
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By analyzing existing cross correlation between ATT Inc and ECOLAB INC 325, you can compare the effects of market volatilities on ATT 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 ATT with a short position of ECOLAB. Check out your portfolio center. Please also check ongoing floating volatility patterns of ATT and ECOLAB.
Diversification Opportunities for ATT and ECOLAB
Excellent diversification
The 3 months correlation between ATT and ECOLAB is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding ATT Inc and ECOLAB INC 325 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ECOLAB INC 325 and ATT 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 ATT Inc 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 325 has no effect on the direction of ATT i.e., ATT and ECOLAB go up and down completely randomly.
Pair Corralation between ATT and ECOLAB
Taking into account the 90-day investment horizon ATT Inc is expected to generate 5.04 times more return on investment than ECOLAB. However, ATT is 5.04 times more volatile than ECOLAB INC 325. It trades about 0.21 of its potential returns per unit of risk. ECOLAB INC 325 is currently generating about -0.06 per unit of risk. If you would invest 2,202 in ATT Inc on August 31, 2024 and sell it today you would earn a total of 114.00 from holding ATT Inc or generate 5.18% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 86.96% |
| Values | Daily Returns |
ATT Inc vs. ECOLAB INC 325
Performance |
| Timeline |
| ATT Inc |
| ECOLAB INC 325 |
ATT and ECOLAB Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ATT and ECOLAB
The main advantage of trading using opposite ATT and ECOLAB positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ATT 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.The idea behind ATT Inc and ECOLAB INC 325 pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.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 Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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