Correlation Between Isabella Bank and Ecopetrol
Can any of the company-specific risk be diversified away by investing in both Isabella Bank 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 Isabella Bank and Ecopetrol into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Isabella Bank and Ecopetrol SA ADR, you can compare the effects of market volatilities on Isabella Bank 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 Isabella Bank with a short position of Ecopetrol. Check out your portfolio center. Please also check ongoing floating volatility patterns of Isabella Bank and Ecopetrol.
Diversification Opportunities for Isabella Bank and Ecopetrol
0.17 | Correlation Coefficient |
Average diversification
The 3 months correlation between Isabella and Ecopetrol is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding Isabella Bank 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 Isabella Bank 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 Isabella Bank 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 Isabella Bank i.e., Isabella Bank and Ecopetrol go up and down completely randomly.
Pair Corralation between Isabella Bank and Ecopetrol
Given the investment horizon of 90 days Isabella Bank is expected to under-perform the Ecopetrol. In addition to that, Isabella Bank is 1.07 times more volatile than Ecopetrol SA ADR. It trades about -0.03 of its total potential returns per unit of risk. Ecopetrol SA ADR is currently generating about 0.04 per unit of volatility. If you would invest 1,055 in Ecopetrol SA ADR on January 19, 2024 and sell it today you would earn a total of 79.00 from holding Ecopetrol SA ADR or generate 7.49% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Isabella Bank vs. Ecopetrol SA ADR
Performance |
| Timeline |
| Isabella Bank |
| Ecopetrol SA ADR |
Isabella Bank and Ecopetrol Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Isabella Bank and Ecopetrol
The main advantage of trading using opposite Isabella Bank and Ecopetrol positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Isabella Bank 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.| Isabella Bank vs. Pfizer Inc | Isabella Bank vs. Heartland Financial USA | Isabella Bank vs. Conflux Network | Isabella Bank vs. Citigroup Capital XIII |
| 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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