Correlation Between Ecolab and Industrial Nanotech

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

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

Diversification Opportunities for Ecolab and Industrial Nanotech

0.09

Correlation Coefficient

Ecolab  Industrial Nanotech

Significant diversification

The 3 months correlation between Ecolab and Industrial is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding Ecolab Inc and Industrial Nanotech in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Industrial Nanotech 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 Industrial Nanotech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Industrial Nanotech has no effect on the direction of Ecolab i.e., Ecolab and Industrial Nanotech go up and down completely randomly.

Pair Corralation between Ecolab and Industrial Nanotech

Considering the 90-day investment horizon Ecolab Inc is expected to under-perform the Industrial Nanotech. But the stock apears to be less risky and, when comparing its historical volatility, Ecolab Inc is 415.71 times less risky than Industrial Nanotech. The stock trades about -0.15 of its potential returns per unit of risk. The Industrial Nanotech is currently generating about 0.4 of returns per unit of risk over similar time horizon. If you would invest  0.00  in Industrial Nanotech on October 6, 2024 and sell it today you would earn a total of  0.01  from holding Industrial Nanotech or generate 9.223372036854776E16% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	97.62%
Values	Daily Returns

Ecolab Inc  vs.  Industrial Nanotech

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.

Industrial Nanotech

Risk-Adjusted Performance

24 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Industrial Nanotech are ranked lower than 24 (%) of all global equities and portfolios over the last 90 days. Despite quite weak basic indicators, Industrial Nanotech disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Ecolab and Industrial Nanotech

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

The idea behind Ecolab Inc and Industrial Nanotech 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.