Correlation Between Exxon and ECOLAB
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By analyzing existing cross correlation between Exxon Mobil Corp and ECOLAB INC 325, you can compare the effects of market volatilities on Exxon 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 Exxon with a short position of ECOLAB. Check out your portfolio center. Please also check ongoing floating volatility patterns of Exxon and ECOLAB.
Diversification Opportunities for Exxon and ECOLAB
Very good diversification
The 3 months correlation between Exxon and ECOLAB is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding Exxon Mobil Corp 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 Exxon 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 Exxon Mobil Corp 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 Exxon i.e., Exxon and ECOLAB go up and down completely randomly.
Pair Corralation between Exxon and ECOLAB
Considering the 90-day investment horizon Exxon is expected to generate 54.12 times less return on investment than ECOLAB. But when comparing it to its historical volatility, Exxon Mobil Corp is 36.0 times less risky than ECOLAB. It trades about 0.03 of its potential returns per unit of risk. ECOLAB INC 325 is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 9,460 in ECOLAB INC 325 on September 3, 2024 and sell it today you would earn a total of 98.00 from holding ECOLAB INC 325 or generate 1.04% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 78.59% |
| Values | Daily Returns |
Exxon Mobil Corp vs. ECOLAB INC 325
Performance |
| Timeline |
| Exxon Mobil Corp |
| ECOLAB INC 325 |
Exxon and ECOLAB Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Exxon and ECOLAB
The main advantage of trading using opposite Exxon and ECOLAB positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Exxon 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 Exxon Mobil Corp 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.| ECOLAB vs. Glacier Bancorp | ECOLAB vs. AmTrust Financial Services | ECOLAB vs. Fomento Economico Mexicano | ECOLAB vs. Suntory Beverage Food |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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