Correlation Between Ecolab and International Media

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

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

Diversification Opportunities for Ecolab and International Media

0.35

Correlation Coefficient

Ecolab  International Media

Weak diversification

The 3 months correlation between Ecolab and International is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Ecolab Inc and International Media Acquisitio in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on International Media 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 International Media. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of International Media has no effect on the direction of Ecolab i.e., Ecolab and International Media go up and down completely randomly.

Pair Corralation between Ecolab and International Media

Considering the 90-day investment horizon Ecolab Inc is expected to generate 0.95 times more return on investment than International Media. However, Ecolab Inc is 1.06 times less risky than International Media. It trades about 0.08 of its potential returns per unit of risk. International Media Acquisition is currently generating about 0.04 per unit of risk. If you would invest  14,696  in Ecolab Inc on September 28, 2024 and sell it today you would earn a total of  8,939  from holding Ecolab Inc or generate 60.83% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	80.85%
Values	Daily Returns

Ecolab Inc  vs.  International Media Acquisitio

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 unsteady 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.

International Media

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Ecolab and International Media

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

The idea behind Ecolab Inc and International Media Acquisition 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.