Correlation Between AMAZON and Ecolab
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By analyzing existing cross correlation between AMAZON INC 315 and Ecolab Inc, you can compare the effects of market volatilities on AMAZON 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 AMAZON with a short position of Ecolab. Check out your portfolio center. Please also check ongoing floating volatility patterns of AMAZON and Ecolab.
Diversification Opportunities for AMAZON and Ecolab
Modest diversification
The 3 months correlation between AMAZON and Ecolab is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding AMAZON INC 315 and Ecolab Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ecolab Inc and AMAZON 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 AMAZON INC 315 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 AMAZON i.e., AMAZON and Ecolab go up and down completely randomly.
Pair Corralation between AMAZON and Ecolab
Assuming the 90 days trading horizon AMAZON INC 315 is expected to under-perform the Ecolab. But the bond apears to be less risky and, when comparing its historical volatility, AMAZON INC 315 is 1.58 times less risky than Ecolab. The bond trades about 0.0 of its potential returns per unit of risk. The Ecolab Inc is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 17,419 in Ecolab Inc on August 31, 2024 and sell it today you would earn a total of 7,458 from holding Ecolab Inc or generate 42.82% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 99.47% |
| Values | Daily Returns |
AMAZON INC 315 vs. Ecolab Inc
Performance |
| Timeline |
| AMAZON INC 315 |
| Ecolab Inc |
AMAZON and Ecolab Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AMAZON and Ecolab
The main advantage of trading using opposite AMAZON and Ecolab positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AMAZON 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 AMAZON INC 315 and Ecolab Inc 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.| 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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