Correlation Between Ecolab and Fluent

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

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

Diversification Opportunities for Ecolab and Fluent

0.41

Correlation Coefficient

Ecolab  Fluent

Very weak diversification

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

Pair Corralation between Ecolab and Fluent

Considering the 90-day investment horizon Ecolab is expected to generate 8.94 times less return on investment than Fluent. But when comparing it to its historical volatility, Ecolab Inc is 5.44 times less risky than Fluent. It trades about 0.01 of its potential returns per unit of risk. Fluent Inc is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  275.00  in Fluent Inc on September 3, 2024 and sell it today you would earn a total of  1.00  from holding Fluent Inc or generate 0.36% return on investment over 90 days.

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

Ecolab Inc  vs.  Fluent Inc

Ecolab Inc

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Ecolab Inc are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. 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.

Fluent Inc

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Fluent Inc are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Fluent may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Ecolab and Fluent

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

The idea behind Ecolab Inc and Fluent 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 CEOs Directory module to screen CEOs from public companies around the world.