Correlation Between Ecolab and Genfit

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

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

Diversification Opportunities for Ecolab and Genfit

0.75

Correlation Coefficient

Ecolab  Genfit

Poor diversification

The 3 months correlation between Ecolab and Genfit is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Ecolab Inc and Genfit in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Genfit 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 Genfit. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Genfit has no effect on the direction of Ecolab i.e., Ecolab and Genfit go up and down completely randomly.

Pair Corralation between Ecolab and Genfit

Considering the 90-day investment horizon Ecolab Inc is expected to generate 0.51 times more return on investment than Genfit. However, Ecolab Inc is 1.97 times less risky than Genfit. It trades about -0.07 of its potential returns per unit of risk. Genfit is currently generating about -0.24 per unit of risk. If you would invest  24,466  in Ecolab Inc on October 23, 2024 and sell it today you would lose (724.00) from holding Ecolab Inc or give up 2.96% of portfolio value over 90 days.

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

Ecolab Inc  vs.  Genfit

Ecolab Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ecolab Inc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unfluctuating performance, the Stock's fundamental indicators remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Genfit

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Genfit has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's technical and fundamental indicators remain comparatively stable which may send shares a bit higher in February 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Ecolab and Genfit

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

The idea behind Ecolab Inc and Genfit 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.