Correlation Between Ecolab and LB Foster

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

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

Diversification Opportunities for Ecolab and LB Foster

0.0

Correlation Coefficient

Ecolab  LB Foster

Pay attention - limited upside

The 3 months correlation between Ecolab and FSTR is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Ecolab Inc and LB Foster in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LB Foster 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 LB Foster. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LB Foster has no effect on the direction of Ecolab i.e., Ecolab and LB Foster go up and down completely randomly.

Pair Corralation between Ecolab and LB Foster

Considering the 90-day investment horizon Ecolab Inc is expected to under-perform the LB Foster. But the stock apears to be less risky and, when comparing its historical volatility, Ecolab Inc is 2.68 times less risky than LB Foster. The stock trades about 0.0 of its potential returns per unit of risk. The LB Foster is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  2,187  in LB Foster on June 28, 2025 and sell it today you would earn a total of  484.00  from holding LB Foster or generate 22.13% return on investment over 90 days.

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

Ecolab Inc  vs.  LB Foster

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 recent stock price mess, may contribute to short-term losses for the institutional investors.

LB Foster

Risk-Adjusted Performance

Fair

Compared to the overall equity markets, risk-adjusted returns on investments in LB Foster are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Even with relatively unfluctuating basic indicators, LB Foster reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Ecolab and LB Foster

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

The idea behind Ecolab Inc and LB Foster 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.