Correlation Between Femasys and Ecolab

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

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

Diversification Opportunities for Femasys and Ecolab

0.5

Correlation Coefficient

Femasys  Ecolab

Very weak diversification

The 3 months correlation between Femasys and Ecolab is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Femasys and Ecolab Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ecolab Inc and Femasys 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 Femasys 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 Femasys i.e., Femasys and Ecolab go up and down completely randomly.

Pair Corralation between Femasys and Ecolab

Given the investment horizon of 90 days Femasys is expected to generate 4.74 times more return on investment than Ecolab. However, Femasys is 4.74 times more volatile than Ecolab Inc. It trades about 0.05 of its potential returns per unit of risk. Ecolab Inc is currently generating about 0.07 per unit of risk. If you would invest  81.00  in Femasys on October 22, 2024 and sell it today you would earn a total of  30.00  from holding Femasys or generate 37.04% return on investment over 90 days.

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

Femasys  vs.  Ecolab Inc

Femasys

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Femasys has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's primary indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

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.

Pair Trading with Femasys and Ecolab

The main advantage of trading using opposite Femasys and Ecolab positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Femasys 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 Femasys 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.