Correlation Between Ecolab and CAMDEN

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

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

Diversification Opportunities for Ecolab and CAMDEN

-0.03

Correlation Coefficient

Ecolab  CAMDEN

Good diversification

The 3 months correlation between Ecolab and CAMDEN is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding Ecolab Inc and CAMDEN PPTY TR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CAMDEN PPTY TR 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 CAMDEN. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CAMDEN PPTY TR has no effect on the direction of Ecolab i.e., Ecolab and CAMDEN go up and down completely randomly.

Pair Corralation between Ecolab and CAMDEN

Considering the 90-day investment horizon Ecolab Inc is expected to under-perform the CAMDEN. In addition to that, Ecolab is 2.81 times more volatile than CAMDEN PPTY TR. It trades about -0.29 of its total potential returns per unit of risk. CAMDEN PPTY TR is currently generating about -0.28 per unit of volatility. If you would invest  9,818  in CAMDEN PPTY TR on October 6, 2024 and sell it today you would lose (203.00) from holding CAMDEN PPTY TR or give up 2.07% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.0%
Values	Daily Returns

Ecolab Inc  vs.  CAMDEN PPTY TR

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.

CAMDEN PPTY TR

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CAMDEN PPTY TR has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, CAMDEN is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Ecolab and CAMDEN

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

The idea behind Ecolab Inc and CAMDEN PPTY TR 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.