Correlation Between Snap and Ecolab
Can any of the company-specific risk be diversified away by investing in both Snap and Ecolab 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 Snap and Ecolab into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Snap Inc and Ecolab Inc, you can compare the effects of market volatilities on Snap 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 Snap with a short position of Ecolab. Check out your portfolio center. Please also check ongoing floating volatility patterns of Snap and Ecolab.
Diversification Opportunities for Snap and Ecolab
Pay attention - limited upside
The 3 months correlation between Snap and Ecolab is -0.84. Overlapping area represents the amount of risk that can be diversified away by holding Snap Inc and Ecolab Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ecolab Inc and Snap 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 Snap 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 has no effect on the direction of Snap i.e., Snap and Ecolab go up and down completely randomly.
Pair Corralation between Snap and Ecolab
Given the investment horizon of 90 days Snap Inc is expected to generate 3.14 times more return on investment than Ecolab. However, Snap is 3.14 times more volatile than Ecolab Inc. It trades about 0.1 of its potential returns per unit of risk. Ecolab Inc is currently generating about -0.16 per unit of risk. If you would invest 1,105 in Snap Inc on January 19, 2024 and sell it today you would earn a total of 58.00 from holding Snap Inc or generate 5.25% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Snap Inc vs. Ecolab Inc
Performance |
| Timeline |
| Snap Inc |
| Ecolab Inc |
Snap and Ecolab Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Snap and Ecolab
The main advantage of trading using opposite Snap and Ecolab positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Snap 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 Snap Inc 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
Other Complementary Tools
| AI Investment Finder Use AI to screen and filter profitable investment opportunities | |
| Idea Optimizer Use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio | |
| Performance Analysis Check effects of mean-variance optimization against your current asset allocation | |
| Theme Ratings Determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Piotroski F Score Get Piotroski F Score based on the binary analysis strategy of nine different fundamentals | |
| Investing Opportunities Build portfolios using our predefined set of ideas and optimize them against your investing preferences | |
| Options Analysis Analyze and evaluate options and option chains as a potential hedge for your portfolios | |
| Top Crypto Exchanges Search and analyze digital assets across top global cryptocurrency exchanges | |
| Portfolio Analyzer Portfolio analysis module that provides access to portfolio diagnostics and optimization engine | |
| Portfolio Rebalancing Analyze risk-adjusted returns against different time horizons to find asset-allocation targets |