Correlation Between Ecolab and JP Morgan

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

Diversification Opportunities for Ecolab and JP Morgan

0.8
  Correlation Coefficient

Very poor diversification

The 3 months correlation between Ecolab and JP Morgan is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Ecolab Inc and JP Morgan Chase in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JP Morgan Chase 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 JP Morgan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JP Morgan Chase has no effect on the direction of Ecolab i.e., Ecolab and JP Morgan go up and down completely randomly.

Pair Corralation between Ecolab and JP Morgan

Considering the 90-day investment horizon Ecolab Inc is expected to under-perform the JP Morgan. In addition to that, Ecolab is 1.33 times more volatile than JP Morgan Chase. It trades about -0.23 of its total potential returns per unit of risk. JP Morgan Chase is currently generating about -0.15 per unit of volatility. If you would invest  11,467  in JP Morgan Chase on June 27, 2022 and sell it today you would lose (553.00)  from holding JP Morgan Chase or give up 4.82% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthStrong
Accuracy100.0%
ValuesDaily Returns

Ecolab Inc  vs.  JP Morgan Chase

 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 current stock price chaos, may contribute to medium-term losses for the stakeholders.

Ecolab Price Channel

JP Morgan Chase 
JP Morgan Performance
0 of 100
Over the last 90 days JP Morgan Chase has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively steady basic indicators, JP Morgan is not utilizing all of its potentials. The current stock price chaos, may contribute to medium-term losses for the stakeholders.

JP Morgan Price Channel

Ecolab and JP Morgan Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Ecolab and JP Morgan

The main advantage of trading using opposite Ecolab and JP Morgan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ecolab position performs unexpectedly, JP Morgan 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 JP Morgan will offset losses from the drop in JP Morgan's long position.
Ecolab vs. Industrias Bachoco SA
The idea behind Ecolab Inc and JP Morgan Chase 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.
JP Morgan vs. China Construction B
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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