Correlation Between Ecolab and Vindicator Silver

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

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

Diversification Opportunities for Ecolab and Vindicator Silver

0.22

Correlation Coefficient

Ecolab  Vindicator Silver

Modest diversification

The 3 months correlation between Ecolab and Vindicator is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Ecolab Inc and Vindicator Silver Lead Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vindicator Silver Lead 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 Vindicator Silver. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vindicator Silver Lead has no effect on the direction of Ecolab i.e., Ecolab and Vindicator Silver go up and down completely randomly.

Pair Corralation between Ecolab and Vindicator Silver

Considering the 90-day investment horizon Ecolab Inc is expected to generate 0.33 times more return on investment than Vindicator Silver. However, Ecolab Inc is 3.07 times less risky than Vindicator Silver. It trades about -0.01 of its potential returns per unit of risk. Vindicator Silver Lead Mining is currently generating about -0.16 per unit of risk. If you would invest  24,853  in Ecolab Inc on September 18, 2024 and sell it today you would lose (232.00) from holding Ecolab Inc or give up 0.93% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.44%
Values	Daily Returns

Ecolab Inc  vs.  Vindicator Silver Lead Mining

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 quite persistent fundamental indicators, Ecolab is not utilizing all of its potentials. The current stock price mess, may contribute to short-term losses for the institutional investors.

Vindicator Silver Lead

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Vindicator Silver Lead Mining has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Ecolab and Vindicator Silver

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

The idea behind Ecolab Inc and Vindicator Silver Lead Mining 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..