Correlation Between Embecta Corp and Ecolab

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

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

Diversification Opportunities for Embecta Corp and Ecolab

-0.41

Correlation Coefficient

Embecta Corp  Ecolab

Very good diversification

The 3 months correlation between Embecta and Ecolab is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding Embecta Corp and Ecolab Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ecolab Inc and Embecta Corp 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 Embecta Corp are associated (or correlated) with Ecolab. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ecolab Inc has no effect on the direction of Embecta Corp i.e., Embecta Corp and Ecolab go up and down completely randomly.

Pair Corralation between Embecta Corp and Ecolab

Given the investment horizon of 90 days Embecta Corp is expected to generate 4.29 times more return on investment than Ecolab. However, Embecta Corp is 4.29 times more volatile than Ecolab Inc. It trades about 0.06 of its potential returns per unit of risk. Ecolab Inc is currently generating about 0.15 per unit of risk. If you would invest  1,144  in Embecta Corp on May 14, 2025 and sell it today you would earn a total of  129.00  from holding Embecta Corp or generate 11.28% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.39%
Values	Daily Returns

Embecta Corp  vs.  Ecolab Inc

Embecta Corp

Risk-Adjusted Performance

Soft

Compared to the overall equity markets, risk-adjusted returns on investments in Embecta Corp are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak fundamental drivers, Embecta Corp exhibited solid returns over the last few months and may actually be approaching a breakup point.

Ecolab Inc

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Ecolab Inc are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite quite unfluctuating fundamental indicators, Ecolab may actually be approaching a critical reversion point that can send shares even higher in September 2025.

Pair Trading with Embecta Corp and Ecolab

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

The idea behind Embecta Corp and Ecolab Inc 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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.