Correlation Between Ecolab and RYANAIR HLDGS

Can any of the company-specific risk be diversified away by investing in both Ecolab and RYANAIR HLDGS 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 RYANAIR HLDGS into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Ecolab Inc and RYANAIR HLDGS ADR, you can compare the effects of market volatilities on Ecolab and RYANAIR HLDGS 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 RYANAIR HLDGS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ecolab and RYANAIR HLDGS.

Diversification Opportunities for Ecolab and RYANAIR HLDGS

0.72

Correlation Coefficient

Ecolab  RYANAIR HLDGS

Poor diversification

The 3 months correlation between Ecolab and RYANAIR is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Ecolab Inc and RYANAIR HLDGS ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RYANAIR HLDGS 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 RYANAIR HLDGS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of RYANAIR HLDGS ADR has no effect on the direction of Ecolab i.e., Ecolab and RYANAIR HLDGS go up and down completely randomly.

Pair Corralation between Ecolab and RYANAIR HLDGS

Assuming the 90 days horizon Ecolab is expected to generate 18.37 times less return on investment than RYANAIR HLDGS. But when comparing it to its historical volatility, Ecolab Inc is 1.65 times less risky than RYANAIR HLDGS. It trades about 0.02 of its potential returns per unit of risk. RYANAIR HLDGS ADR is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest  4,300  in RYANAIR HLDGS ADR on May 1, 2025 and sell it today you would earn a total of  1,050  from holding RYANAIR HLDGS ADR or generate 24.42% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.44%
Values	Daily Returns

Ecolab Inc  vs.  RYANAIR HLDGS ADR

Ecolab Inc

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Ecolab Inc are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Ecolab is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

RYANAIR HLDGS ADR

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in RYANAIR HLDGS ADR are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, RYANAIR HLDGS reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Ecolab and RYANAIR HLDGS

The main advantage of trading using opposite Ecolab and RYANAIR HLDGS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ecolab position performs unexpectedly, RYANAIR HLDGS 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 RYANAIR HLDGS will offset losses from the drop in RYANAIR HLDGS's long position.

The idea behind Ecolab Inc and RYANAIR HLDGS ADR 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.

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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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.