Correlation Between Bank First and Ecolab

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

Diversification Opportunities for Bank First and Ecolab

0.45
  Correlation Coefficient

Very weak diversification

The 3 months correlation between Bank First and Ecolab is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Bank First National and Ecolab Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ecolab Inc and Bank First 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 Bank First National 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 Bank First i.e., Bank First and Ecolab go up and down completely randomly.

Pair Corralation between Bank First and Ecolab

Considering the 90-day investment horizon Bank First National is expected to generate 0.75 times more return on investment than Ecolab. However, Bank First National is 1.33 times less risky than Ecolab. It trades about -0.01 of its potential returns per unit of risk. Ecolab Inc is currently generating about -0.05 per unit of risk. If you would invest  7,740  in Bank First National on July 6, 2022 and sell it today you would lose (88.00)  from holding Bank First National or give up 1.14% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

Bank First National  vs.  Ecolab Inc

 Performance (%) 
       Timeline  
Bank First National 
Bank First Performance
0 of 100
Over the last 90 days Bank First National has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong technical and fundamental indicators, Bank First is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Bank First 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 relatively steady fundamental indicators, Ecolab is not utilizing all of its potentials. The latest stock price chaos, may contribute to medium-term losses for the stakeholders.

Ecolab Price Channel

Bank First and Ecolab Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Bank First and Ecolab

The main advantage of trading using opposite Bank First and Ecolab positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank First 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.
Bank First vs. Amazon Inc
The idea behind Bank First National 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.

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