Correlation Between Croda International and Ecolab
Can any of the company-specific risk be diversified away by investing in both Croda International 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 Croda International and Ecolab into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Croda International PLC and Ecolab Inc, you can compare the effects of market volatilities on Croda International 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 Croda International with a short position of Ecolab. Check out your portfolio center. Please also check ongoing floating volatility patterns of Croda International and Ecolab.
Diversification Opportunities for Croda International and Ecolab
0.18 | Correlation Coefficient |
Average diversification
The 3 months correlation between Croda and Ecolab is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding Croda International PLC and Ecolab Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ecolab Inc and Croda International 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 Croda International PLC 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 Croda International i.e., Croda International and Ecolab go up and down completely randomly.
Pair Corralation between Croda International and Ecolab
Assuming the 90 days horizon Croda International PLC is expected to generate 1.81 times more return on investment than Ecolab. However, Croda International is 1.81 times more volatile than Ecolab Inc. It trades about 0.0 of its potential returns per unit of risk. Ecolab Inc is currently generating about -0.18 per unit of risk. If you would invest 3,083 in Croda International PLC on January 24, 2024 and sell it today you would lose (11.00) from holding Croda International PLC or give up 0.36% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Croda International PLC vs. Ecolab Inc
Performance |
| Timeline |
| Croda International PLC |
| Ecolab Inc |
Croda International and Ecolab Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Croda International and Ecolab
The main advantage of trading using opposite Croda International and Ecolab positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Croda International 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.| Croda International vs. Air Liquide SA | Croda International vs. Sherwin Williams Co | Croda International vs. Ecolab Inc | Croda International vs. Air Products and |
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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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