Correlation Between Astronics and Ecolab

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

Diversification Opportunities for Astronics and Ecolab

0.57
  Correlation Coefficient

Very weak diversification

The 3 months correlation between Astronics and Ecolab is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Astronics Cp and Ecolab Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ecolab Inc and Astronics 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 Astronics Cp 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 Astronics i.e., Astronics and Ecolab go up and down completely randomly.

Pair Corralation between Astronics and Ecolab

Given the investment horizon of 90 days Astronics Cp is expected to generate 2.13 times more return on investment than Ecolab. However, Astronics is 2.13 times more volatile than Ecolab Inc. It trades about 0.02 of its potential returns per unit of risk. Ecolab Inc is currently generating about -0.03 per unit of risk. If you would invest  829.00  in Astronics Cp on July 2, 2022 and sell it today you would lose (23.00)  from holding Astronics Cp or give up 2.77% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

Astronics Cp  vs.  Ecolab Inc

 Performance (%) 
       Timeline  
Astronics Cp 
Astronics Performance
0 of 100
Over the last 90 days Astronics Cp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's basic indicators remain quite persistent which may send shares a bit higher in October 2022. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Astronics 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

Astronics and Ecolab Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Astronics and Ecolab

The main advantage of trading using opposite Astronics and Ecolab positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Astronics 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.
Astronics vs. Amazon Inc
The idea behind Astronics Cp 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.
Ecolab vs. Amazon Inc
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.

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