Correlation Between Ecolab and Macys
Can any of the company-specific risk be diversified away by investing in both Ecolab and Macys 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 Macys into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ecolab Inc and Macys Inc, you can compare the effects of market volatilities on Ecolab and Macys 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 Macys. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ecolab and Macys.
Diversification Opportunities for Ecolab and Macys
Very weak diversification
The 3 months correlation between Ecolab and Macys is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Ecolab Inc and Macys Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Macys Inc 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 Macys. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Macys Inc has no effect on the direction of Ecolab i.e., Ecolab and Macys go up and down completely randomly.
Pair Corralation between Ecolab and Macys
Considering the 90-day investment horizon Ecolab Inc is expected to generate 0.38 times more return on investment than Macys. However, Ecolab Inc is 2.65 times less risky than Macys. It trades about -0.15 of its potential returns per unit of risk. Macys Inc is currently generating about -0.08 per unit of risk. If you would invest 22,707 in Ecolab Inc on January 25, 2024 and sell it today you would lose (656.00) from holding Ecolab Inc or give up 2.89% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ecolab Inc vs. Macys Inc
Performance |
| Timeline |
| Ecolab Inc |
| Macys Inc |
Ecolab and Macys Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ecolab and Macys
The main advantage of trading using opposite Ecolab and Macys positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ecolab position performs unexpectedly, Macys 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 Macys will offset losses from the drop in Macys' long position.| Ecolab vs. Linde plc Ordinary | Ecolab vs. PPG Industries | Ecolab vs. Sherwin Williams Co | Ecolab vs. LyondellBasell Industries NV |
| Macys vs. Marks Spencer Group | Macys vs. Marks and Spencer | Macys vs. Dillards Capital Trust | Macys vs. Companhia Brasileira de |
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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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