Correlation Between Ecolab and Canadian National

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

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

Diversification Opportunities for Ecolab and Canadian National

0.07

Correlation Coefficient

Ecolab  Canadian National

Significant diversification

The 3 months correlation between Ecolab and Canadian is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Ecolab Inc and Canadian National Railway in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Canadian National Railway 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 Canadian National. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Canadian National Railway has no effect on the direction of Ecolab i.e., Ecolab and Canadian National go up and down completely randomly.

Pair Corralation between Ecolab and Canadian National

Considering the 90-day investment horizon Ecolab Inc is expected to under-perform the Canadian National. In addition to that, Ecolab is 1.14 times more volatile than Canadian National Railway. It trades about -0.04 of its total potential returns per unit of risk. Canadian National Railway is currently generating about 0.07 per unit of volatility. If you would invest  9,324  in Canadian National Railway on September 9, 2025 and sell it today you would earn a total of  501.00  from holding Canadian National Railway or generate 5.37% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Ecolab Inc  vs.  Canadian National Railway

Ecolab Inc

Risk-Adjusted Performance

Weakest

Over the last 90 days Ecolab Inc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent fundamental indicators, Ecolab is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Canadian National Railway

Risk-Adjusted Performance

Fair

Compared to the overall equity markets, risk-adjusted returns on investments in Canadian National Railway are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong basic indicators, Canadian National is not utilizing all of its potentials. The latest stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Ecolab and Canadian National

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

The idea behind Ecolab Inc and Canadian National Railway 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.

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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.