Correlation Between Aci Worldwide and Ecolab

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Can any of the company-specific risk be diversified away by investing in both Aci Worldwide 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 Aci Worldwide and Ecolab into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Aci Worldwide and Ecolab Inc, you can compare the effects of market volatilities on Aci Worldwide 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 Aci Worldwide with a short position of Ecolab. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aci Worldwide and Ecolab.

Diversification Opportunities for Aci Worldwide and Ecolab

0.32
  Correlation Coefficient

Weak diversification

The 3 months correlation between Aci Worldwide and Ecolab is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Aci Worldwide and Ecolab Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ecolab Inc and Aci Worldwide 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 Aci Worldwide 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 Aci Worldwide i.e., Aci Worldwide and Ecolab go up and down completely randomly.

Pair Corralation between Aci Worldwide and Ecolab

Given the investment horizon of 90 days Aci Worldwide is expected to generate 0.84 times more return on investment than Ecolab. However, Aci Worldwide is 1.19 times less risky than Ecolab. It trades about -0.2 of its potential returns per unit of risk. Ecolab Inc is currently generating about -0.23 per unit of risk. If you would invest  2,265  in Aci Worldwide on July 4, 2022 and sell it today you would lose (175.00)  from holding Aci Worldwide or give up 7.73% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

Aci Worldwide  vs.  Ecolab Inc

 Performance (%) 
       Timeline  
Aci Worldwide 
Aci Worldwide Performance
0 of 100
Over the last 90 days Aci Worldwide has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's forward indicators remain fairly stable which may send shares a bit higher in November 2022. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Aci Worldwide Price Channel

Ecolab Inc 
Ecolab Performance
0 of 100
Over the last 90 days Ecolab Inc has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest conflicting performance, the Stock's fundamental indicators remain steady and the new chaos on Wall Street may also be a sign of medium-term gains for the company stakeholders.

Ecolab Price Channel

Aci Worldwide and Ecolab Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Aci Worldwide and Ecolab

The main advantage of trading using opposite Aci Worldwide and Ecolab positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aci Worldwide 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.
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The idea behind Aci Worldwide 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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Check out your portfolio center. 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.

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