Correlation Between Ecopetrol and National Bank
Can any of the company-specific risk be diversified away by investing in both Ecopetrol and National 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 National 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 National Bank of, you can compare the effects of market volatilities on Ecopetrol and National 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 National Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ecopetrol and National Bank.
Diversification Opportunities for Ecopetrol and National Bank
-0.65 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Ecopetrol and National is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding Ecopetrol SA ADR and National Bank of in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on National 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 National Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of National Bank has no effect on the direction of Ecopetrol i.e., Ecopetrol and National Bank go up and down completely randomly.
Pair Corralation between Ecopetrol and National Bank
Allowing for the 90-day total investment horizon Ecopetrol SA ADR is expected to generate 1.76 times more return on investment than National Bank. However, Ecopetrol is 1.76 times more volatile than National Bank of. It trades about 0.25 of its potential returns per unit of risk. National Bank of is currently generating about -0.04 per unit of risk. If you would invest 750.00 in Ecopetrol SA ADR on September 12, 2024 and sell it today you would earn a total of 86.00 from holding Ecopetrol SA ADR or generate 11.47% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Ecopetrol SA ADR vs. National Bank of
Performance |
| Timeline |
| Ecopetrol SA ADR |
| National Bank |
Ecopetrol and National Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ecopetrol and National Bank
The main advantage of trading using opposite Ecopetrol and National Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ecopetrol position performs unexpectedly, National 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 National Bank will offset losses from the drop in National Bank's long position.| Ecopetrol vs. Victory Integrity Smallmid Cap | Ecopetrol vs. Hilton Worldwide Holdings | Ecopetrol vs. NVIDIA | Ecopetrol vs. JPMorgan Chase Co |
| National Bank vs. Barclays PLC ADR | National Bank vs. Banco Bilbao Viscaya | National Bank vs. Banco Santander SA | National Bank vs. UBS Group AG |
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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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