Correlation Between Ecolab and Artisan Partners

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

By analyzing existing cross correlation between Ecolab Inc and Artisan Partners Asset, you can compare the effects of market volatilities on Ecolab and Artisan Partners 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 Artisan Partners. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ecolab and Artisan Partners.

Diversification Opportunities for Ecolab and Artisan Partners

-0.07

Correlation Coefficient

Ecolab  Artisan Partners

Good diversification

The 3 months correlation between Ecolab and Artisan is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding Ecolab Inc and Artisan Partners Asset in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Artisan Partners Asset 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 Artisan Partners. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Artisan Partners Asset has no effect on the direction of Ecolab i.e., Ecolab and Artisan Partners go up and down completely randomly.

Pair Corralation between Ecolab and Artisan Partners

Considering the 90-day investment horizon Ecolab Inc is expected to under-perform the Artisan Partners. But the stock apears to be less risky and, when comparing its historical volatility, Ecolab Inc is 1.54 times less risky than Artisan Partners. The stock trades about -0.02 of its potential returns per unit of risk. The Artisan Partners Asset is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  3,743  in Artisan Partners Asset on October 7, 2024 and sell it today you would earn a total of  534.00  from holding Artisan Partners Asset or generate 14.27% return on investment over 90 days.

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

Ecolab Inc  vs.  Artisan Partners Asset

Ecolab Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ecolab Inc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unfluctuating performance, the Stock's fundamental indicators remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Artisan Partners Asset

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Artisan Partners Asset are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Artisan Partners is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Ecolab and Artisan Partners

The main advantage of trading using opposite Ecolab and Artisan Partners positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ecolab position performs unexpectedly, Artisan Partners 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 Artisan Partners will offset losses from the drop in Artisan Partners' long position.

The idea behind Ecolab Inc and Artisan Partners Asset 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.

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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.