Correlation Between Ecolab and Bar Harbor

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

Diversification Opportunities for Ecolab and Bar Harbor

0.68
  Correlation Coefficient

Poor diversification

The 3 months correlation between Ecolab and Bar Harbor is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Ecolab Inc and Bar Harbor Bankshares in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bar Harbor Bankshares 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 Bar Harbor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bar Harbor Bankshares has no effect on the direction of Ecolab i.e., Ecolab and Bar Harbor go up and down completely randomly.

Pair Corralation between Ecolab and Bar Harbor

Considering the 90-day investment horizon Ecolab Inc is expected to under-perform the Bar Harbor. But the stock apears to be less risky and, when comparing its historical volatility, Ecolab Inc is 1.08 times less risky than Bar Harbor. The stock trades about -0.26 of its potential returns per unit of risk. The Bar Harbor Bankshares is currently generating about -0.05 of returns per unit of risk over similar time horizon. If you would invest  2,767  in Bar Harbor Bankshares on July 1, 2022 and sell it today you would lose (80.00)  from holding Bar Harbor Bankshares or give up 2.89% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

Ecolab Inc  vs.  Bar Harbor Bankshares

 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 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

Bar Harbor Bankshares 
Bar Harbor Performance
1 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Bar Harbor Bankshares are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong technical indicators, Bar Harbor is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Bar Harbor Price Channel

Ecolab and Bar Harbor Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Ecolab and Bar Harbor

The main advantage of trading using opposite Ecolab and Bar Harbor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ecolab position performs unexpectedly, Bar Harbor 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 Bar Harbor will offset losses from the drop in Bar Harbor's long position.
Ecolab vs. Amazon Inc
The idea behind Ecolab Inc and Bar Harbor Bankshares 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.
Bar Harbor 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 Bond Directory module to find actively traded corporate debentures issued by US companies.

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