Correlation Between Ecolab and NextNav Warrant

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

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

Diversification Opportunities for Ecolab and NextNav Warrant

-0.71

Correlation Coefficient

Ecolab  NextNav Warrant

Pay attention - limited upside

The 3 months correlation between Ecolab and NextNav is -0.71. Overlapping area represents the amount of risk that can be diversified away by holding Ecolab Inc and NextNav Warrant in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NextNav Warrant 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 NextNav Warrant. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NextNav Warrant has no effect on the direction of Ecolab i.e., Ecolab and NextNav Warrant go up and down completely randomly.

Pair Corralation between Ecolab and NextNav Warrant

Considering the 90-day investment horizon Ecolab Inc is expected to generate 0.16 times more return on investment than NextNav Warrant. However, Ecolab Inc is 6.35 times less risky than NextNav Warrant. It trades about 0.07 of its potential returns per unit of risk. NextNav Warrant is currently generating about 0.0 per unit of risk. If you would invest  23,874  in Ecolab Inc on December 26, 2024 and sell it today you would earn a total of  1,246  from holding Ecolab Inc or generate 5.22% return on investment over 90 days.

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

Ecolab Inc  vs.  NextNav Warrant

Ecolab Inc

Risk-Adjusted Performance

Modest

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

NextNav Warrant

Risk-Adjusted Performance

Very Weak

Over the last 90 days NextNav Warrant has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, NextNav Warrant is not utilizing all of its potentials. The recent stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Ecolab and NextNav Warrant

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

The idea behind Ecolab Inc and NextNav Warrant 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.