Correlation Between Ecolab and 5E Advanced

Can any of the company-specific risk be diversified away by investing in both Ecolab and 5E Advanced 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 5E Advanced into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Ecolab Inc and 5E Advanced Materials, you can compare the effects of market volatilities on Ecolab and 5E Advanced 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 5E Advanced. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ecolab and 5E Advanced.

Diversification Opportunities for Ecolab and 5E Advanced

-0.69

Correlation Coefficient

Ecolab  5E Advanced

Excellent diversification

The 3 months correlation between Ecolab and FEAM is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding Ecolab Inc and 5E Advanced Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on 5E Advanced Materials 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 5E Advanced. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of 5E Advanced Materials has no effect on the direction of Ecolab i.e., Ecolab and 5E Advanced go up and down completely randomly.

Pair Corralation between Ecolab and 5E Advanced

Considering the 90-day investment horizon Ecolab Inc is expected to generate 0.21 times more return on investment than 5E Advanced. However, Ecolab Inc is 4.68 times less risky than 5E Advanced. It trades about 0.21 of its potential returns per unit of risk. 5E Advanced Materials is currently generating about -0.08 per unit of risk. If you would invest  23,908  in Ecolab Inc on April 24, 2025 and sell it today you would earn a total of  3,147  from holding Ecolab Inc or generate 13.16% return on investment over 90 days.

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

Ecolab Inc  vs.  5E Advanced Materials

Ecolab Inc

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Ecolab Inc are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite quite unfluctuating fundamental indicators, Ecolab disclosed solid returns over the last few months and may actually be approaching a breakup point.

5E Advanced Materials

Risk-Adjusted Performance

Very Weak

Over the last 90 days 5E Advanced Materials has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in August 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Ecolab and 5E Advanced

The main advantage of trading using opposite Ecolab and 5E Advanced positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ecolab position performs unexpectedly, 5E Advanced 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 5E Advanced will offset losses from the drop in 5E Advanced's long position.

The idea behind Ecolab Inc and 5E Advanced Materials 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.