Correlation Between Sika AG and Ecolab
Can any of the company-specific risk be diversified away by investing in both Sika AG 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 Sika AG and Ecolab into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sika AG and Ecolab Inc, you can compare the effects of market volatilities on Sika AG 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 Sika AG with a short position of Ecolab. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sika AG and Ecolab.
Diversification Opportunities for Sika AG and Ecolab
Very poor diversification
The 3 months correlation between Sika and Ecolab is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Sika AG and Ecolab Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ecolab Inc and Sika AG 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 Sika AG 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 Sika AG i.e., Sika AG and Ecolab go up and down completely randomly.
Pair Corralation between Sika AG and Ecolab
Assuming the 90 days horizon Sika AG is expected to under-perform the Ecolab. In addition to that, Sika AG is 2.54 times more volatile than Ecolab Inc. It trades about -0.14 of its total potential returns per unit of risk. Ecolab Inc is currently generating about -0.15 per unit of volatility. If you would invest 22,707 in Ecolab Inc on January 25, 2024 and sell it today you would lose (629.00) from holding Ecolab Inc or give up 2.77% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Strong |
Accuracy | 100.0% |
Values | Daily Returns |
Sika AG vs. Ecolab Inc
Performance |
Timeline |
Sika AG |
Ecolab Inc |
Sika AG and Ecolab Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Sika AG and Ecolab
The main advantage of trading using opposite Sika AG and Ecolab positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sika AG 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.Sika AG vs. Air Liquide SA | Sika AG vs. Sherwin Williams Co | Sika AG vs. Ecolab Inc | Sika AG vs. Air Products and |
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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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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