Correlation Between Ecolab and Linde Plc
Can any of the company-specific risk be diversified away by investing in both Ecolab and Linde Plc 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 Linde Plc into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ecolab Inc and Linde plc Ordinary, you can compare the effects of market volatilities on Ecolab and Linde Plc 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 Linde Plc. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ecolab and Linde Plc.
Diversification Opportunities for Ecolab and Linde Plc
Very poor diversification
The 3 months correlation between Ecolab and Linde is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Ecolab Inc and Linde plc Ordinary in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Linde plc Ordinary 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 Linde Plc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Linde plc Ordinary has no effect on the direction of Ecolab i.e., Ecolab and Linde Plc go up and down completely randomly.
Pair Corralation between Ecolab and Linde Plc
Considering the 90-day investment horizon Ecolab Inc is expected to generate 1.11 times more return on investment than Linde Plc. However, Ecolab is 1.11 times more volatile than Linde plc Ordinary. It trades about 0.25 of its potential returns per unit of risk. Linde plc Ordinary is currently generating about 0.09 per unit of risk. If you would invest 23,094 in Ecolab Inc on April 20, 2025 and sell it today you would earn a total of 3,807 from holding Ecolab Inc or generate 16.48% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ecolab Inc vs. Linde plc Ordinary
Performance |
| Timeline |
| Ecolab Inc |
| Linde plc Ordinary |
Ecolab and Linde Plc Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ecolab and Linde Plc
The main advantage of trading using opposite Ecolab and Linde Plc positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ecolab position performs unexpectedly, Linde Plc 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 Linde Plc will offset losses from the drop in Linde Plc's long position.| Ecolab vs. Linde plc Ordinary | Ecolab vs. PPG Industries | Ecolab vs. Sherwin Williams Co | Ecolab vs. LyondellBasell Industries NV |
| Linde Plc vs. Air Products and | Linde Plc vs. PPG Industries | Linde Plc vs. Sherwin Williams Co | Linde Plc vs. Ecolab 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 the AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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