Correlation Between SLR Investment and Ecopetrol
Can any of the company-specific risk be diversified away by investing in both SLR Investment 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 SLR Investment and Ecopetrol into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SLR Investment Corp and Ecopetrol SA, you can compare the effects of market volatilities on SLR Investment 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 SLR Investment with a short position of Ecopetrol. Check out your portfolio center. Please also check ongoing floating volatility patterns of SLR Investment and Ecopetrol.
Diversification Opportunities for SLR Investment and Ecopetrol
0.58 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between SLR and Ecopetrol is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding SLR Investment Corp and Ecopetrol SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ecopetrol SA and SLR Investment 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 SLR Investment Corp 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 has no effect on the direction of SLR Investment i.e., SLR Investment and Ecopetrol go up and down completely randomly.
Pair Corralation between SLR Investment and Ecopetrol
Assuming the 90 days horizon SLR Investment is expected to generate 2.36 times less return on investment than Ecopetrol. But when comparing it to its historical volatility, SLR Investment Corp is 2.0 times less risky than Ecopetrol. It trades about 0.32 of its potential returns per unit of risk. Ecopetrol SA is currently generating about 0.37 of returns per unit of risk over similar time horizon. If you would invest 728.00 in Ecopetrol SA on October 23, 2024 and sell it today you would earn a total of 84.00 from holding Ecopetrol SA or generate 11.54% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
SLR Investment Corp vs. Ecopetrol SA
Performance |
| Timeline |
| SLR Investment Corp |
| Ecopetrol SA |
SLR Investment and Ecopetrol Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SLR Investment and Ecopetrol
The main advantage of trading using opposite SLR Investment and Ecopetrol positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SLR Investment 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.| SLR Investment vs. BII Railway Transportation | SLR Investment vs. PLANT VEDA FOODS | SLR Investment vs. Nomad Foods | SLR Investment vs. INDOFOOD AGRI RES |
| Ecopetrol vs. ARDAGH METAL PACDL 0001 | Ecopetrol vs. Stag Industrial | Ecopetrol vs. SLR Investment Corp | Ecopetrol vs. MidCap Financial Investment |
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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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