Correlation Between Ecolab and INTNED

Can any of the company-specific risk be diversified away by investing in both Ecolab and INTNED 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 Ecolab and INTNED into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Ecolab Inc and INTNED 547761 01 APR 27, you can compare the effects of market volatilities on Ecolab and INTNED 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 Ecolab with a short position of INTNED. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ecolab and INTNED.

Diversification Opportunities for Ecolab and INTNED

0.09

Correlation Coefficient

Ecolab  INTNED

Significant diversification

The 3 months correlation between Ecolab and INTNED is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding Ecolab Inc and INTNED 547761 01 APR 27 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on INTNED 547761 01 and Ecolab 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 Ecolab Inc are associated (or correlated) with INTNED. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of INTNED 547761 01 has no effect on the direction of Ecolab i.e., Ecolab and INTNED go up and down completely randomly.

Pair Corralation between Ecolab and INTNED

Considering the 90-day investment horizon Ecolab Inc is expected to under-perform the INTNED. In addition to that, Ecolab is 5.68 times more volatile than INTNED 547761 01 APR 27. It trades about -0.02 of its total potential returns per unit of risk. INTNED 547761 01 APR 27 is currently generating about -0.08 per unit of volatility. If you would invest  10,043  in INTNED 547761 01 APR 27 on September 14, 2024 and sell it today you would lose (28.00) from holding INTNED 547761 01 APR 27 or give up 0.28% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	34.92%
Values	Daily Returns

Ecolab Inc  vs.  INTNED 547761 01 APR 27

Ecolab Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ecolab Inc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent fundamental indicators, Ecolab is not utilizing all of its potentials. The current stock price mess, may contribute to short-term losses for the institutional investors.

INTNED 547761 01

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days INTNED 547761 01 APR 27 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, INTNED is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Ecolab and INTNED

The main advantage of trading using opposite Ecolab and INTNED positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ecolab position performs unexpectedly, INTNED 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 INTNED will offset losses from the drop in INTNED's long position.

The idea behind Ecolab Inc and INTNED 547761 01 APR 27 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 Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.