Correlation Between Banco De and Eco (Atlantic)
Can any of the company-specific risk be diversified away by investing in both Banco De and Eco (Atlantic) 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 Banco De and Eco (Atlantic) into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Banco De Chile and Eco Oil Gas, you can compare the effects of market volatilities on Banco De and Eco (Atlantic) 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 Banco De with a short position of Eco (Atlantic). Check out your portfolio center. Please also check ongoing floating volatility patterns of Banco De and Eco (Atlantic).
Diversification Opportunities for Banco De and Eco (Atlantic)
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Banco and Eco is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Banco De Chile and Eco Oil Gas in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eco (Atlantic) and Banco De 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 Banco De Chile are associated (or correlated) with Eco (Atlantic). Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eco (Atlantic) has no effect on the direction of Banco De i.e., Banco De and Eco (Atlantic) go up and down completely randomly.
Pair Corralation between Banco De and Eco (Atlantic)
Considering the 90-day investment horizon Banco De Chile is expected to under-perform the Eco (Atlantic). But the stock apears to be less risky and, when comparing its historical volatility, Banco De Chile is 7.73 times less risky than Eco (Atlantic). The stock trades about -0.13 of its potential returns per unit of risk. The Eco Oil Gas is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 12.00 in Eco Oil Gas on August 30, 2024 and sell it today you would earn a total of 0.00 from holding Eco Oil Gas or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Banco De Chile vs. Eco Oil Gas
Performance |
| Timeline |
| Banco De Chile |
| Eco (Atlantic) |
Banco De and Eco (Atlantic) Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Banco De and Eco (Atlantic)
The main advantage of trading using opposite Banco De and Eco (Atlantic) positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Banco De position performs unexpectedly, Eco (Atlantic) 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 Eco (Atlantic) will offset losses from the drop in Eco (Atlantic)'s long position.| Banco De vs. Banco Santander Brasil | Banco De vs. CrossFirst Bankshares | Banco De vs. Banco Bradesco SA | Banco De vs. CF Bankshares |
| Eco (Atlantic) vs. CGX Energy | Eco (Atlantic) vs. Frontera Energy Corp | Eco (Atlantic) vs. Africa Energy Corp | Eco (Atlantic) vs. Africa Oil Corp |
Check out your portfolio center.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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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