Correlation Between Ecopetrol and Croghan Bancshares
Can any of the company-specific risk be diversified away by investing in both Ecopetrol and Croghan Bancshares 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 Croghan Bancshares 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 Croghan Bancshares, you can compare the effects of market volatilities on Ecopetrol and Croghan Bancshares 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 Croghan Bancshares. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ecopetrol and Croghan Bancshares.
Diversification Opportunities for Ecopetrol and Croghan Bancshares
-0.47 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Ecopetrol and Croghan is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding Ecopetrol SA ADR and Croghan Bancshares in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Croghan Bancshares 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 Croghan Bancshares. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Croghan Bancshares has no effect on the direction of Ecopetrol i.e., Ecopetrol and Croghan Bancshares go up and down completely randomly.
Pair Corralation between Ecopetrol and Croghan Bancshares
Allowing for the 90-day total investment horizon Ecopetrol SA ADR is expected to under-perform the Croghan Bancshares. In addition to that, Ecopetrol is 1.39 times more volatile than Croghan Bancshares. It trades about -0.05 of its total potential returns per unit of risk. Croghan Bancshares is currently generating about 0.05 per unit of volatility. If you would invest 4,391 in Croghan Bancshares on September 4, 2024 and sell it today you would earn a total of 599.00 from holding Croghan Bancshares or generate 13.64% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 86.64% |
| Values | Daily Returns |
Ecopetrol SA ADR vs. Croghan Bancshares
Performance |
| Timeline |
| Ecopetrol SA ADR |
| Croghan Bancshares |
Ecopetrol and Croghan Bancshares Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ecopetrol and Croghan Bancshares
The main advantage of trading using opposite Ecopetrol and Croghan Bancshares positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ecopetrol position performs unexpectedly, Croghan Bancshares 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 Croghan Bancshares will offset losses from the drop in Croghan Bancshares' long position.| Ecopetrol vs. Petroleo Brasileiro Petrobras | Ecopetrol vs. Equinor ASA ADR | Ecopetrol vs. Eni SpA ADR | Ecopetrol vs. Cenovus Energy |
| Croghan Bancshares vs. Consol Energy | Croghan Bancshares vs. Dave Busters Entertainment | Croghan Bancshares vs. Xponential Fitness | Croghan Bancshares vs. Eldorado Gold 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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