Correlation Between Logility Supply and Ecolab

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

By analyzing existing cross correlation between Logility Supply Chain and Ecolab Inc, you can compare the effects of market volatilities on Logility Supply and Ecolab 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 Logility Supply with a short position of Ecolab. Check out your portfolio center. Please also check ongoing floating volatility patterns of Logility Supply and Ecolab.

Diversification Opportunities for Logility Supply and Ecolab

-0.38

Correlation Coefficient

Logility Supply  Ecolab

Very good diversification

The 3 months correlation between Logility and Ecolab is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding Logility Supply Chain and Ecolab Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ecolab Inc and Logility Supply 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 Logility Supply Chain are associated (or correlated) with Ecolab. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ecolab Inc has no effect on the direction of Logility Supply i.e., Logility Supply and Ecolab go up and down completely randomly.

Pair Corralation between Logility Supply and Ecolab

Given the investment horizon of 90 days Logility Supply Chain is expected to generate 2.29 times more return on investment than Ecolab. However, Logility Supply is 2.29 times more volatile than Ecolab Inc. It trades about -0.04 of its potential returns per unit of risk. Ecolab Inc is currently generating about -0.33 per unit of risk. If you would invest  1,133  in Logility Supply Chain on October 8, 2024 and sell it today you would lose (29.00) from holding Logility Supply Chain or give up 2.56% of portfolio value over 90 days.

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

Logility Supply Chain  vs.  Ecolab Inc

Logility Supply Chain

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Logility Supply Chain are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Logility Supply may actually be approaching a critical reversion point that can send shares even higher in February 2025.

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.

Pair Trading with Logility Supply and Ecolab

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

The idea behind Logility Supply Chain and Ecolab Inc 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.