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Volatility Analysis for Ecolab Inc.

Chapter II: Risks associated with short and long period price changes can be understood through Volatility Analysis. Here the impact of the Volatility Curve on the potential profitability positions across different time spans is shown.

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ECL:  Daily Volatility = Price Range as a percent of the daily average price.

Volatility is defined as the price range for a period, divided by the average price for the period:

For instance, on 11/11/2010 the average price was 49.17 with a range of 0.72, indicating a Daily Volatility of 1.4%. Daily Volatility (the daily range as a portion of the daily average price) is plotted in green. Blue is Weekly Volatility, which is the weekly range as a portion of the weekly average price. This is a different concept from the weekly average of daily volatility.

The red plot shows the actual price. Volatility, as measured through various intervals, ( Daily, Weekly, Monthly and Quarterly) is plotted according to color.

Investors often make a distinction between the concept of Volatility, and the concept of Risk. Academics define them to be exactly equivalent, but as can be seen here, there is good reason to distinguish between the levels of volatility or risk experienced across different time frames. Average Daily Volatility over the history of ECL has been 2% in contrast to the Average Quarterly Volatility of 18%.



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ECL:  Volatility Curve

You may be familiar with the "yield curve" which shows how interest bearing yields vary according to term. These Volatility Curves each apply to a discrete time interval. From left to right, each position plots the Volatility associated with increasing intervals of time. The relationship between the length of time, and the expected change in price, is not linear, as is demonstrated by this chart.



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Daily Volatility Histogram of Ecolab Inc.

This histogram is a frequency distribution of Daily Volatility, corresponding to the green points on the first chart on this page.



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ECL:  Quarterly Volatility Histogram

Similarly, the purple points on the top chart, the Quarterly Volatility Values, are subjected to frequency distribution here.

For Subscribers: Refined Analysis of Ecolab Inc. Volatility and Risk Behavior

Refined Volatility Risk Analysis for ECL :


Companies in the News:

Friday, February 18, 2011: We have news on Fiserv, Inc., ticker symbol FISV. Signs of an over-bought condition have become noticable. Also, there are breaking events concerning Zimmer Holdings, Inc. and McCormick & Company, Incorporated.

From the News Archive: (2/18/2011 ) Bad news came from Reynolds American, Inc., Dollar Tree, Inc., Zimmer Holdings, Inc., and NVIDIA Corp.


More ECL Technical Analysis Topics

ECL Price Predictions

Support and Resistance Levels

Politics and Prices of ECL

Japanese Candlestick Analysis

Momentum Investing Indicators

ECL Classical Analysis of Time Series

ECL Historical Volume

ECL Seasonal Trends

Market Sentiment

Back to ECL Table of Contents


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