Correlation Between Air Products and Ecolab

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

Diversification Opportunities for Air Products and Ecolab

0.01
  Correlation Coefficient

Significant diversification

The 3 months correlation between Air Products and Ecolab is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding Air Products And and Ecolab Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ecolab Inc and Air Products 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 Air Products And 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 Air Products i.e., Air Products and Ecolab go up and down completely randomly.

Pair Corralation between Air Products and Ecolab

Considering the 90-day investment horizon Air Products And is expected to generate 0.88 times more return on investment than Ecolab. However, Air Products And is 1.14 times less risky than Ecolab. It trades about 0.03 of its potential returns per unit of risk. Ecolab Inc is currently generating about -0.04 per unit of risk. If you would invest  25,832  in Air Products And on August 31, 2022 and sell it today you would earn a total of  4,516  from holding Air Products And or generate 17.48% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Air Products And  vs.  Ecolab Inc

 Performance (%) 
       Timeline  
Air Products And 
Air Products Performance
12 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Air Products And are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak basic indicators, Air Products exhibited solid returns over the last few months and may actually be approaching a breakup point.

Air Products 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 unfluctuating 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

Air Products and Ecolab Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Air Products and Ecolab

The main advantage of trading using opposite Air Products and Ecolab positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Air Products 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 Air Products And 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.

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