Correlation Between Ecolab and Omnia Wellness

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

Diversification Opportunities for Ecolab and Omnia Wellness

-0.55
  Correlation Coefficient

Excellent diversification

The 3 months correlation between Ecolab and Omnia is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding Ecolab Inc and Omnia Wellness in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Omnia Wellness 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 Omnia Wellness. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Omnia Wellness has no effect on the direction of Ecolab i.e., Ecolab and Omnia Wellness go up and down completely randomly.

Pair Corralation between Ecolab and Omnia Wellness

Considering the 90-day investment horizon Ecolab Inc is expected to under-perform the Omnia Wellness. But the stock apears to be less risky and, when comparing its historical volatility, Ecolab Inc is 30.77 times less risky than Omnia Wellness. The stock trades about -0.23 of its potential returns per unit of risk. The Omnia Wellness is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest  14.00  in Omnia Wellness on June 27, 2022 and sell it today you would lose (1.00)  from holding Omnia Wellness or give up 7.14% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthVery Weak
Accuracy95.45%
ValuesDaily Returns

Ecolab Inc  vs.  Omnia Wellness

 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

Omnia Wellness 
Omnia Performance
8 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Omnia Wellness are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Omnia Wellness reported solid returns over the last few months and may actually be approaching a breakup point.

Omnia Price Channel

Ecolab and Omnia Wellness Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Ecolab and Omnia Wellness

The main advantage of trading using opposite Ecolab and Omnia Wellness positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ecolab position performs unexpectedly, Omnia Wellness 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 Omnia Wellness will offset losses from the drop in Omnia Wellness' long position.
Ecolab vs. Industrias Bachoco SA
The idea behind Ecolab Inc and Omnia Wellness 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.
Omnia Wellness vs. Industrias Bachoco SA
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.

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