Correlation Between Ecopetrol and Bitcoin Well
Can any of the company-specific risk be diversified away by investing in both Ecopetrol and Bitcoin Well 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 Bitcoin Well 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 Bitcoin Well, you can compare the effects of market volatilities on Ecopetrol and Bitcoin Well 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 Bitcoin Well. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ecopetrol and Bitcoin Well.
Diversification Opportunities for Ecopetrol and Bitcoin Well
-0.61 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Ecopetrol and Bitcoin is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding Ecopetrol SA ADR and Bitcoin Well in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bitcoin Well 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 Bitcoin Well. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bitcoin Well has no effect on the direction of Ecopetrol i.e., Ecopetrol and Bitcoin Well go up and down completely randomly.
Pair Corralation between Ecopetrol and Bitcoin Well
Allowing for the 90-day total investment horizon Ecopetrol SA ADR is expected to under-perform the Bitcoin Well. But the stock apears to be less risky and, when comparing its historical volatility, Ecopetrol SA ADR is 7.87 times less risky than Bitcoin Well. The stock trades about -0.02 of its potential returns per unit of risk. The Bitcoin Well is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 2.55 in Bitcoin Well on August 25, 2024 and sell it today you would earn a total of 13.45 from holding Bitcoin Well or generate 527.45% 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. Bitcoin Well
Performance |
| Timeline |
| Ecopetrol SA ADR |
| Bitcoin Well |
Ecopetrol and Bitcoin Well Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ecopetrol and Bitcoin Well
The main advantage of trading using opposite Ecopetrol and Bitcoin Well positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ecopetrol position performs unexpectedly, Bitcoin Well 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 Bitcoin Well will offset losses from the drop in Bitcoin Well's long position.| Ecopetrol vs. Shell PLC ADR | Ecopetrol vs. Suncor Energy | Ecopetrol vs. Equinor ASA ADR | Ecopetrol vs. Cenovus Energy |
| Bitcoin Well vs. SPENN Technology AS | Bitcoin Well vs. Arcane Crypto AB | Bitcoin Well vs. OFX Group Ltd | Bitcoin Well vs. Blockmate Ventures |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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