Correlation Between Fifth District and Ecolab

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

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

Diversification Opportunities for Fifth District and Ecolab

0.25

Correlation Coefficient

Fifth District  Ecolab

Modest diversification

The 3 months correlation between Fifth and Ecolab is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Fifth District Bancorp, and Ecolab Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ecolab Inc and Fifth District 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 Fifth District Bancorp, 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 Fifth District i.e., Fifth District and Ecolab go up and down completely randomly.

Pair Corralation between Fifth District and Ecolab

Given the investment horizon of 90 days Fifth District is expected to generate 1.63 times less return on investment than Ecolab. But when comparing it to its historical volatility, Fifth District Bancorp, is 1.08 times less risky than Ecolab. It trades about 0.1 of its potential returns per unit of risk. Ecolab Inc is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  24,954  in Ecolab Inc on May 14, 2025 and sell it today you would earn a total of  2,333  from holding Ecolab Inc or generate 9.35% return on investment over 90 days.

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

Fifth District Bancorp,  vs.  Ecolab Inc

Fifth District Bancorp,

Risk-Adjusted Performance

Fair

Compared to the overall equity markets, risk-adjusted returns on investments in Fifth District Bancorp, are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Fifth District is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

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 Fifth District and Ecolab

The main advantage of trading using opposite Fifth District and Ecolab positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fifth District 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 Fifth District Bancorp, 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.