Correlation Between Ecopetrol and Prospector Capital
Can any of the company-specific risk be diversified away by investing in both Ecopetrol and Prospector Capital 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 Prospector Capital 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 Prospector Capital Corp, you can compare the effects of market volatilities on Ecopetrol and Prospector Capital 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 Prospector Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ecopetrol and Prospector Capital.
Diversification Opportunities for Ecopetrol and Prospector Capital
-0.78 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Ecopetrol and Prospector is -0.78. Overlapping area represents the amount of risk that can be diversified away by holding Ecopetrol SA ADR and Prospector Capital Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Prospector Capital Corp 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 Prospector Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Prospector Capital Corp has no effect on the direction of Ecopetrol i.e., Ecopetrol and Prospector Capital go up and down completely randomly.
Pair Corralation between Ecopetrol and Prospector Capital
If you would invest 761.00 in Ecopetrol SA ADR on September 4, 2024 and sell it today you would earn a total of 32.00 from holding Ecopetrol SA ADR or generate 4.2% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 4.76% |
| Values | Daily Returns |
Ecopetrol SA ADR vs. Prospector Capital Corp
Performance |
| Timeline |
| Ecopetrol SA ADR |
| Prospector Capital Corp |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Ecopetrol and Prospector Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ecopetrol and Prospector Capital
The main advantage of trading using opposite Ecopetrol and Prospector Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ecopetrol position performs unexpectedly, Prospector Capital 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 Prospector Capital will offset losses from the drop in Prospector Capital's long position.| Ecopetrol vs. Petroleo Brasileiro Petrobras | Ecopetrol vs. Equinor ASA ADR | Ecopetrol vs. Eni SpA ADR | Ecopetrol vs. Cenovus Energy |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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