Correlation Between Ecolab and Nabors Industries

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

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

Diversification Opportunities for Ecolab and Nabors Industries

0.51

Correlation Coefficient

Ecolab  Nabors Industries

Very weak diversification

The 3 months correlation between Ecolab and Nabors is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Ecolab Inc and Nabors Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nabors Industries 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 Nabors Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nabors Industries has no effect on the direction of Ecolab i.e., Ecolab and Nabors Industries go up and down completely randomly.

Pair Corralation between Ecolab and Nabors Industries

Considering the 90-day investment horizon Ecolab Inc is expected to under-perform the Nabors Industries. But the stock apears to be less risky and, when comparing its historical volatility, Ecolab Inc is 8.93 times less risky than Nabors Industries. The stock trades about -0.29 of its potential returns per unit of risk. The Nabors Industries is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest  490.00  in Nabors Industries on October 6, 2024 and sell it today you would lose (50.00) from holding Nabors Industries or give up 10.2% of portfolio value over 90 days.

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

Ecolab Inc  vs.  Nabors Industries

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.

Nabors Industries

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Nabors Industries has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Ecolab and Nabors Industries

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

The idea behind Ecolab Inc and Nabors Industries 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.