Correlation Between Uranium Energy and Ecolab

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

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

Diversification Opportunities for Uranium Energy and Ecolab

0.31

Correlation Coefficient

Uranium Energy  Ecolab

Weak diversification

The 3 months correlation between Uranium and Ecolab is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Uranium Energy Corp and Ecolab Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ecolab Inc and Uranium Energy 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 Uranium Energy Corp 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 Uranium Energy i.e., Uranium Energy and Ecolab go up and down completely randomly.

Pair Corralation between Uranium Energy and Ecolab

Considering the 90-day investment horizon Uranium Energy Corp is expected to generate 4.07 times more return on investment than Ecolab. However, Uranium Energy is 4.07 times more volatile than Ecolab Inc. It trades about 0.01 of its potential returns per unit of risk. Ecolab Inc is currently generating about -0.17 per unit of risk. If you would invest  714.00  in Uranium Energy Corp on October 14, 2024 and sell it today you would lose (11.00) from holding Uranium Energy Corp or give up 1.54% of portfolio value over 90 days.

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

Uranium Energy Corp  vs.  Ecolab Inc

Uranium Energy Corp

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Uranium Energy Corp are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound technical and fundamental indicators, Uranium Energy is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

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 Uranium Energy and Ecolab

The main advantage of trading using opposite Uranium Energy and Ecolab positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Uranium Energy 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 Uranium Energy Corp 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.