Correlation Between Ecopetrol and Agricultural Bank
Can any of the company-specific risk be diversified away by investing in both Ecopetrol and Agricultural Bank 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 Ecopetrol and Agricultural Bank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ecopetrol SA ADR and Agricultural Bank of, you can compare the effects of market volatilities on Ecopetrol and Agricultural Bank 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 Ecopetrol with a short position of Agricultural Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ecopetrol and Agricultural Bank.
Diversification Opportunities for Ecopetrol and Agricultural Bank
-0.71 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Ecopetrol and Agricultural is -0.71. Overlapping area represents the amount of risk that can be diversified away by holding Ecopetrol SA ADR and Agricultural Bank of in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Agricultural Bank and Ecopetrol 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 Ecopetrol SA ADR are associated (or correlated) with Agricultural Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Agricultural Bank has no effect on the direction of Ecopetrol i.e., Ecopetrol and Agricultural Bank go up and down completely randomly.
Pair Corralation between Ecopetrol and Agricultural Bank
Allowing for the 90-day total investment horizon Ecopetrol SA ADR is expected to generate 1.08 times more return on investment than Agricultural Bank. However, Ecopetrol is 1.08 times more volatile than Agricultural Bank of. It trades about 0.08 of its potential returns per unit of risk. Agricultural Bank of is currently generating about 0.04 per unit of risk. If you would invest 781.00 in Ecopetrol SA ADR on August 31, 2024 and sell it today you would earn a total of 23.00 from holding Ecopetrol SA ADR or generate 2.94% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ecopetrol SA ADR vs. Agricultural Bank of
Performance |
| Timeline |
| Ecopetrol SA ADR |
| Agricultural Bank |
Ecopetrol and Agricultural Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ecopetrol and Agricultural Bank
The main advantage of trading using opposite Ecopetrol and Agricultural Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ecopetrol position performs unexpectedly, Agricultural Bank 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 Agricultural Bank will offset losses from the drop in Agricultural Bank's long position.| Ecopetrol vs. Petroleo Brasileiro Petrobras | Ecopetrol vs. Equinor ASA ADR | Ecopetrol vs. Eni SpA ADR | Ecopetrol vs. Cenovus Energy |
| Agricultural Bank vs. Bank of America | Agricultural Bank vs. Bank of America | Agricultural Bank vs. Bank of America | Agricultural Bank vs. China Construction Bank |
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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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