Correlation Between Ecolab and Pfizer

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

Diversification Opportunities for Ecolab and Pfizer

0.17
  Correlation Coefficient

Average diversification

The 3 months correlation between Ecolab and Pfizer is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding Ecolab Inc and Pfizer Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pfizer 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 Pfizer. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pfizer Inc has no effect on the direction of Ecolab i.e., Ecolab and Pfizer go up and down completely randomly.

Pair Corralation between Ecolab and Pfizer

Considering the 90-day investment horizon Ecolab Inc is expected to under-perform the Pfizer. In addition to that, Ecolab is 1.63 times more volatile than Pfizer Inc. It trades about -0.24 of its total potential returns per unit of risk. Pfizer Inc is currently generating about -0.23 per unit of volatility. If you would invest  4,663  in Pfizer Inc on July 3, 2022 and sell it today you would lose (287.00)  from holding Pfizer Inc or give up 6.15% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthInsignificant
Accuracy95.45%
ValuesDaily Returns

Ecolab Inc  vs.  Pfizer 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 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

Pfizer Inc 
Pfizer Performance
0 of 100
Over the last 90 days Pfizer Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of conflicting performance in the last few months, the Stock's technical and fundamental indicators remain rather sound which may send shares a bit higher in November 2022. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pfizer Price Channel

Ecolab and Pfizer Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Ecolab and Pfizer

The main advantage of trading using opposite Ecolab and Pfizer positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ecolab position performs unexpectedly, Pfizer 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 Pfizer will offset losses from the drop in Pfizer's long position.
Ecolab vs. Amazon Inc
The idea behind Ecolab Inc and Pfizer 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.
Pfizer 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.

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