Correlation Between Ecolab and Rio Tinto
Can any of the company-specific risk be diversified away by investing in both Ecolab and Rio Tinto 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 Rio Tinto into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ecolab Inc and Rio Tinto ADR, you can compare the effects of market volatilities on Ecolab and Rio Tinto 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 Rio Tinto. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ecolab and Rio Tinto.
Diversification Opportunities for Ecolab and Rio Tinto
Very good diversification
The 3 months correlation between Ecolab and Rio is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding Ecolab Inc and Rio Tinto ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rio Tinto ADR 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 Rio Tinto. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rio Tinto ADR has no effect on the direction of Ecolab i.e., Ecolab and Rio Tinto go up and down completely randomly.
Pair Corralation between Ecolab and Rio Tinto
Considering the 90-day investment horizon Ecolab Inc is expected to under-perform the Rio Tinto. But the stock apears to be less risky and, when comparing its historical volatility, Ecolab Inc is 1.04 times less risky than Rio Tinto. The stock trades about -0.04 of its potential returns per unit of risk. The Rio Tinto ADR is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest 6,211 in Rio Tinto ADR on August 27, 2025 and sell it today you would earn a total of 836.00 from holding Rio Tinto ADR or generate 13.46% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ecolab Inc vs. Rio Tinto ADR
Performance |
| Timeline |
| Ecolab Inc |
| Rio Tinto ADR |
Ecolab and Rio Tinto Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ecolab and Rio Tinto
The main advantage of trading using opposite Ecolab and Rio Tinto positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ecolab position performs unexpectedly, Rio Tinto 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 Rio Tinto will offset losses from the drop in Rio Tinto's long position.| Ecolab vs. Agriculture Natural Solutions | Ecolab vs. Construction Partners | Ecolab vs. Journey Medical Corp | Ecolab vs. Profound Medical Corp |
| Rio Tinto vs. ProUroCare Medical | Rio Tinto vs. Merit Medical Systems | Rio Tinto vs. Young Cos Brewery | Rio Tinto vs. Monster Beverage 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 the Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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