Correlation Between Ecolab and Visa

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

Diversification Opportunities for Ecolab and Visa

0.73
  Correlation Coefficient

Poor diversification

The 3 months correlation between Ecolab and Visa is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Ecolab Inc and Visa Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Visa 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 Visa. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Visa Inc has no effect on the direction of Ecolab i.e., Ecolab and Visa go up and down completely randomly.

Pair Corralation between Ecolab and Visa

Considering the 90-day investment horizon Ecolab Inc is expected to under-perform the Visa. In addition to that, Ecolab is 1.66 times more volatile than Visa Inc. It trades about -0.26 of its total potential returns per unit of risk. Visa Inc is currently generating about -0.41 per unit of volatility. If you would invest  19,864  in Visa Inc on July 5, 2022 and sell it today you would lose (2,099)  from holding Visa Inc or give up 10.57% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

Ecolab Inc  vs.  Visa 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

Visa Inc 
Visa Performance
0 of 100
Over the last 90 days Visa Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest sluggish performance, the Stock's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

Visa Price Channel

Ecolab and Visa Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Ecolab and Visa

The main advantage of trading using opposite Ecolab and Visa positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ecolab position performs unexpectedly, Visa 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 Visa will offset losses from the drop in Visa's long position.
Ecolab vs. Amazon Inc
The idea behind Ecolab Inc and Visa 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.
Visa vs. Paypal Holdings
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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..

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