Correlation Between Ecolab and Dupont De

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

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

Diversification Opportunities for Ecolab and Dupont De

0.67

Correlation Coefficient

Ecolab  Dupont De

Poor diversification

The 3 months correlation between Ecolab and Dupont is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Ecolab Inc and Dupont De Nemours in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dupont De Nemours 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 Dupont De. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dupont De Nemours has no effect on the direction of Ecolab i.e., Ecolab and Dupont De go up and down completely randomly.

Pair Corralation between Ecolab and Dupont De

Considering the 90-day investment horizon Ecolab Inc is expected to generate 0.89 times more return on investment than Dupont De. However, Ecolab Inc is 1.12 times less risky than Dupont De. It trades about 0.1 of its potential returns per unit of risk. Dupont De Nemours is currently generating about -0.02 per unit of risk. If you would invest  24,812  in Ecolab Inc on November 29, 2024 and sell it today you would earn a total of  1,835  from holding Ecolab Inc or generate 7.4% return on investment over 90 days.

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

Ecolab Inc  vs.  Dupont De Nemours

Ecolab Inc

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Ecolab Inc are ranked lower than 7 (%) 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 March 2025.

Dupont De Nemours

Risk-Adjusted Performance

Very Weak

Over the last 90 days Dupont De Nemours has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound fundamental indicators, Dupont De is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Ecolab and Dupont De

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

The idea behind Ecolab Inc and Dupont De Nemours 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 Transaction History module to view history of all your transactions and understand their impact on performance.