Correlation Between 5E Advanced and Ecolab

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

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

Diversification Opportunities for 5E Advanced and Ecolab

-0.11

Correlation Coefficient

5E Advanced  Ecolab

Good diversification

The 3 months correlation between FEAM and Ecolab is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding 5E Advanced Materials and Ecolab Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ecolab Inc and 5E Advanced 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 5E Advanced Materials 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 5E Advanced i.e., 5E Advanced and Ecolab go up and down completely randomly.

Pair Corralation between 5E Advanced and Ecolab

Given the investment horizon of 90 days 5E Advanced Materials is expected to generate 7.43 times more return on investment than Ecolab. However, 5E Advanced is 7.43 times more volatile than Ecolab Inc. It trades about 0.03 of its potential returns per unit of risk. Ecolab Inc is currently generating about 0.12 per unit of risk. If you would invest  480.00  in 5E Advanced Materials on May 17, 2025 and sell it today you would lose (16.00) from holding 5E Advanced Materials or give up 3.33% of portfolio value over 90 days.

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

5E Advanced Materials  vs.  Ecolab Inc

5E Advanced Materials

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in 5E Advanced Materials are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of very weak basic indicators, 5E Advanced displayed solid returns over the last few months and may actually be approaching a breakup point.

Ecolab Inc

Risk-Adjusted Performance

Fair

Compared to the overall equity markets, risk-adjusted returns on investments in Ecolab Inc are ranked lower than 9 (%) 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 5E Advanced and Ecolab

The main advantage of trading using opposite 5E Advanced and Ecolab positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if 5E Advanced 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 5E Advanced Materials 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.