Correlation Between Ecopetrol and CCFNB Bancorp
Can any of the company-specific risk be diversified away by investing in both Ecopetrol and CCFNB Bancorp 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 CCFNB Bancorp 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 CCFNB Bancorp, you can compare the effects of market volatilities on Ecopetrol and CCFNB Bancorp 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 CCFNB Bancorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ecopetrol and CCFNB Bancorp.
Diversification Opportunities for Ecopetrol and CCFNB Bancorp
-0.46 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Ecopetrol and CCFNB is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding Ecopetrol SA ADR and CCFNB Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CCFNB Bancorp 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 CCFNB Bancorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CCFNB Bancorp has no effect on the direction of Ecopetrol i.e., Ecopetrol and CCFNB Bancorp go up and down completely randomly.
Pair Corralation between Ecopetrol and CCFNB Bancorp
Allowing for the 90-day total investment horizon Ecopetrol is expected to generate 1.23 times less return on investment than CCFNB Bancorp. But when comparing it to its historical volatility, Ecopetrol SA ADR is 2.25 times less risky than CCFNB Bancorp. It trades about 0.03 of its potential returns per unit of risk. CCFNB Bancorp is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 4,254 in CCFNB Bancorp on September 4, 2024 and sell it today you would lose (404.00) from holding CCFNB Bancorp or give up 9.5% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 84.24% |
| Values | Daily Returns |
Ecopetrol SA ADR vs. CCFNB Bancorp
Performance |
| Timeline |
| Ecopetrol SA ADR |
| CCFNB Bancorp |
Ecopetrol and CCFNB Bancorp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ecopetrol and CCFNB Bancorp
The main advantage of trading using opposite Ecopetrol and CCFNB Bancorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ecopetrol position performs unexpectedly, CCFNB Bancorp 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 CCFNB Bancorp will offset losses from the drop in CCFNB Bancorp's long position.| Ecopetrol vs. Petroleo Brasileiro Petrobras | Ecopetrol vs. Equinor ASA ADR | Ecopetrol vs. Eni SpA ADR | Ecopetrol vs. Cenovus Energy |
| CCFNB Bancorp vs. Susquehanna Community Financial | CCFNB Bancorp vs. Mifflinburg Bancorp | CCFNB Bancorp vs. Woodlands Financial Services | CCFNB Bancorp vs. Penns Woods Bancorp |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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