Correlation Between Ecolab and Apple

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

Diversification Opportunities for Ecolab and Apple

0.84
  Correlation Coefficient

Very poor diversification

The 3 months correlation between Ecolab and Apple is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Ecolab Inc and Apple Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Apple Inc and Ecolab 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 Ecolab Inc are associated (or correlated) with Apple. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Apple Inc has no effect on the direction of Ecolab i.e., Ecolab and Apple go up and down completely randomly.

Pair Corralation between Ecolab and Apple

Considering the 90-day investment horizon Ecolab Inc is expected to under-perform the Apple. In addition to that, Ecolab is 1.0 times more volatile than Apple Inc. It trades about -0.15 of its total potential returns per unit of risk. Apple Inc is currently generating about -0.09 per unit of volatility. If you would invest  16,251  in Apple Inc on June 29, 2022 and sell it today you would lose (1,174)  from holding Apple Inc or give up 7.22% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthStrong
Accuracy100.0%
ValuesDaily Returns

Ecolab Inc  vs.  Apple Inc

 Performance (%) 
       Timeline  
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

Apple Inc 
Apple Performance
6 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Apple Inc are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Apple may actually be approaching a critical reversion point that can send shares even higher in October 2022.

Apple Price Channel

Ecolab and Apple Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Ecolab and Apple

The main advantage of trading using opposite Ecolab and Apple positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ecolab position performs unexpectedly, Apple 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 Apple will offset losses from the drop in Apple's long position.
Ecolab vs. Kibush Capital Corp
The idea behind Ecolab Inc and Apple 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.
Apple vs. Kibush Capital Corp
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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.

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