Correlation Between Ecolab and US Bancorp

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

Diversification Opportunities for Ecolab and US Bancorp

0.68
  Correlation Coefficient

Poor diversification

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

Pair Corralation between Ecolab and US Bancorp

Considering the 90-day investment horizon Ecolab Inc is expected to under-perform the US Bancorp. In addition to that, Ecolab is 1.17 times more volatile than US Bancorp. It trades about -0.23 of its total potential returns per unit of risk. US Bancorp is currently generating about -0.27 per unit of volatility. If you would invest  4,649  in US Bancorp on June 27, 2022 and sell it today you would lose (437.00)  from holding US Bancorp or give up 9.4% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

Ecolab Inc  vs.  US Bancorp

 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

US Bancorp 
US Bancorp Performance
0 of 100
Over the last 90 days US Bancorp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest sluggish performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

US Bancorp Price Channel

Ecolab and US Bancorp Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Ecolab and US Bancorp

The main advantage of trading using opposite Ecolab and US Bancorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ecolab position performs unexpectedly, US Bancorp 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 US Bancorp will offset losses from the drop in US Bancorp's long position.
Ecolab vs. Industrias Bachoco SA
The idea behind Ecolab Inc and US Bancorp 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.
US Bancorp vs. Sigma Lithium 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.

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