Correlation Between Ecopetrol and Bank Central
Can any of the company-specific risk be diversified away by investing in both Ecopetrol and Bank Central 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 Bank Central 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 Bank Central Asia, you can compare the effects of market volatilities on Ecopetrol and Bank Central 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 Bank Central. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ecopetrol and Bank Central.
Diversification Opportunities for Ecopetrol and Bank Central
0.36 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Ecopetrol and Bank is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Ecopetrol SA ADR and Bank Central Asia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bank Central Asia 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 Bank Central. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bank Central Asia has no effect on the direction of Ecopetrol i.e., Ecopetrol and Bank Central go up and down completely randomly.
Pair Corralation between Ecopetrol and Bank Central
Allowing for the 90-day total investment horizon Ecopetrol SA ADR is expected to under-perform the Bank Central. In addition to that, Ecopetrol is 1.12 times more volatile than Bank Central Asia. It trades about -0.03 of its total potential returns per unit of risk. Bank Central Asia is currently generating about 0.02 per unit of volatility. If you would invest 1,519 in Bank Central Asia on September 1, 2024 and sell it today you would earn a total of 42.00 from holding Bank Central Asia or generate 2.76% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ecopetrol SA ADR vs. Bank Central Asia
Performance |
| Timeline |
| Ecopetrol SA ADR |
| Bank Central Asia |
Ecopetrol and Bank Central Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ecopetrol and Bank Central
The main advantage of trading using opposite Ecopetrol and Bank Central positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ecopetrol position performs unexpectedly, Bank Central 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 Bank Central will offset losses from the drop in Bank Central's long position.| Ecopetrol vs. Shell PLC ADR | Ecopetrol vs. BP PLC ADR | Ecopetrol vs. Equinor ASA ADR | Ecopetrol vs. Petrleo Brasileiro SA |
| Bank Central vs. Piraeus Bank SA | Bank Central vs. Turkiye Garanti Bankasi | Bank Central vs. Delhi Bank Corp | Bank Central vs. Uwharrie Capital 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
Other Complementary Tools
| Portfolio Backtesting Avoid under-diversification and over-optimization by backtesting your portfolios | |
| ETFs Find actively traded Exchange Traded Funds (ETF) from around the world | |
| Crypto Correlations Use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins | |
| Theme Ratings Determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Watchlist Optimization Optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm |