Correlation Between Mosaic and Ecolab

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

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

Diversification Opportunities for Mosaic and Ecolab

-0.06

Correlation Coefficient

Mosaic  Ecolab

Good diversification

The 3 months correlation between Mosaic and Ecolab is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding The Mosaic and Ecolab Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ecolab Inc and Mosaic 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 The Mosaic 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 Mosaic i.e., Mosaic and Ecolab go up and down completely randomly.

Pair Corralation between Mosaic and Ecolab

Considering the 90-day investment horizon Mosaic is expected to generate 40.58 times less return on investment than Ecolab. In addition to that, Mosaic is 2.31 times more volatile than Ecolab Inc. It trades about 0.0 of its total potential returns per unit of risk. Ecolab Inc is currently generating about 0.14 per unit of volatility. If you would invest  21,917  in Ecolab Inc on February 22, 2024 and sell it today you would earn a total of  1,489  from holding Ecolab Inc or generate 6.79% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

The Mosaic  vs.  Ecolab Inc

Mosaic

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days The Mosaic has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Mosaic is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

Ecolab Inc

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Ecolab Inc are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite quite unfluctuating fundamental indicators, Ecolab may actually be approaching a critical reversion point that can send shares even higher in June 2024.

Pair Trading with Mosaic and Ecolab

The main advantage of trading using opposite Mosaic and Ecolab positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mosaic 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 The Mosaic 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.

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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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.