Correlation Between Ecopetrol and Atlantic Union
Can any of the company-specific risk be diversified away by investing in both Ecopetrol and Atlantic Union 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 Atlantic Union 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 Atlantic Union Bankshares, you can compare the effects of market volatilities on Ecopetrol and Atlantic Union 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 Atlantic Union. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ecopetrol and Atlantic Union.
Diversification Opportunities for Ecopetrol and Atlantic Union
-0.75 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Ecopetrol and Atlantic is -0.75. Overlapping area represents the amount of risk that can be diversified away by holding Ecopetrol SA ADR and Atlantic Union Bankshares in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Atlantic Union Bankshares 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 Atlantic Union. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Atlantic Union Bankshares has no effect on the direction of Ecopetrol i.e., Ecopetrol and Atlantic Union go up and down completely randomly.
Pair Corralation between Ecopetrol and Atlantic Union
Allowing for the 90-day total investment horizon Ecopetrol SA ADR is expected to generate 2.11 times more return on investment than Atlantic Union. However, Ecopetrol is 2.11 times more volatile than Atlantic Union Bankshares. It trades about 0.12 of its potential returns per unit of risk. Atlantic Union Bankshares is currently generating about 0.11 per unit of risk. If you would invest 761.00 in Ecopetrol SA ADR on September 4, 2024 and sell it today you would earn a total of 36.00 from holding Ecopetrol SA ADR or generate 4.73% 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. Atlantic Union Bankshares
Performance |
| Timeline |
| Ecopetrol SA ADR |
| Atlantic Union Bankshares |
Ecopetrol and Atlantic Union Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ecopetrol and Atlantic Union
The main advantage of trading using opposite Ecopetrol and Atlantic Union positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ecopetrol position performs unexpectedly, Atlantic Union 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 Atlantic Union will offset losses from the drop in Atlantic Union's long position.| Ecopetrol vs. Petroleo Brasileiro Petrobras | Ecopetrol vs. Equinor ASA ADR | Ecopetrol vs. Eni SpA ADR | Ecopetrol vs. Cenovus Energy |
| Atlantic Union vs. Sabre Corpo | Atlantic Union vs. Accel Entertainment | Atlantic Union vs. Kura Sushi USA | Atlantic Union vs. RCI Hospitality Holdings |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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