Correlation Between Bank Central and Ecopetrol
Can any of the company-specific risk be diversified away by investing in both Bank Central and Ecopetrol 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 Bank Central and Ecopetrol into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bank Central Asia and Ecopetrol SA ADR, you can compare the effects of market volatilities on Bank Central and Ecopetrol 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 Bank Central with a short position of Ecopetrol. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank Central and Ecopetrol.
Diversification Opportunities for Bank Central and Ecopetrol
0.36 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Bank and Ecopetrol is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Bank Central Asia and Ecopetrol SA ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ecopetrol SA ADR and Bank Central 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 Bank Central Asia are associated (or correlated) with Ecopetrol. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ecopetrol SA ADR has no effect on the direction of Bank Central i.e., Bank Central and Ecopetrol go up and down completely randomly.
Pair Corralation between Bank Central and Ecopetrol
Assuming the 90 days horizon Bank Central Asia is expected to generate 0.9 times more return on investment than Ecopetrol. However, Bank Central Asia is 1.12 times less risky than Ecopetrol. It trades about 0.02 of its potential returns per unit of risk. Ecopetrol SA ADR is currently generating about -0.03 per unit of risk. 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 |
Bank Central Asia vs. Ecopetrol SA ADR
Performance |
| Timeline |
| Bank Central Asia |
| Ecopetrol SA ADR |
Bank Central and Ecopetrol Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank Central and Ecopetrol
The main advantage of trading using opposite Bank Central and Ecopetrol positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank Central position performs unexpectedly, Ecopetrol 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 Ecopetrol will offset losses from the drop in Ecopetrol's long position.| Bank Central vs. Piraeus Bank SA | Bank Central vs. Turkiye Garanti Bankasi | Bank Central vs. Delhi Bank Corp | Bank Central vs. Uwharrie Capital Corp |
| Ecopetrol vs. Shell PLC ADR | Ecopetrol vs. BP PLC ADR | Ecopetrol vs. Equinor ASA ADR | Ecopetrol vs. Petrleo Brasileiro SA |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
Other Complementary Tools
| Aroon Oscillator Analyze current equity momentum using Aroon Oscillator and other momentum ratios | |
| Volatility Analysis Get historical volatility and risk analysis based on latest market data | |
| Sync Your Broker Sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors. | |
| Portfolio Optimization Compute new portfolio that will generate highest expected return given your specified tolerance for risk | |
| Portfolio Anywhere Track or share privately all of your investments from the convenience of any device |