Correlation Between Ecopetrol and Cardinal Health
Can any of the company-specific risk be diversified away by investing in both Ecopetrol and Cardinal Health 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 Cardinal Health 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 Cardinal Health, you can compare the effects of market volatilities on Ecopetrol and Cardinal Health 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 Cardinal Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ecopetrol and Cardinal Health.
Diversification Opportunities for Ecopetrol and Cardinal Health
-0.55 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Ecopetrol and Cardinal is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding Ecopetrol SA ADR and Cardinal Health in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cardinal Health 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 Cardinal Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cardinal Health has no effect on the direction of Ecopetrol i.e., Ecopetrol and Cardinal Health go up and down completely randomly.
Pair Corralation between Ecopetrol and Cardinal Health
Allowing for the 90-day total investment horizon Ecopetrol SA ADR is expected to generate 0.98 times more return on investment than Cardinal Health. However, Ecopetrol SA ADR is 1.02 times less risky than Cardinal Health. It trades about -0.09 of its potential returns per unit of risk. Cardinal Health is currently generating about -0.3 per unit of risk. If you would invest 1,204 in Ecopetrol SA ADR on February 6, 2024 and sell it today you would lose (36.00) from holding Ecopetrol SA ADR or give up 2.99% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Ecopetrol SA ADR vs. Cardinal Health
Performance |
Timeline |
Ecopetrol SA ADR |
Cardinal Health |
Ecopetrol and Cardinal Health Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Ecopetrol and Cardinal Health
The main advantage of trading using opposite Ecopetrol and Cardinal Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ecopetrol position performs unexpectedly, Cardinal Health 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 Cardinal Health will offset losses from the drop in Cardinal Health's long position.Ecopetrol vs. Aquagold International | Ecopetrol vs. Morningstar Unconstrained Allocation | Ecopetrol vs. Thrivent High Yield | Ecopetrol vs. Via Renewables |
Cardinal Health vs. Henry Schein | Cardinal Health vs. Owens Minor | Cardinal Health vs. Patterson Companies | Cardinal Health vs. McKesson |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
Other Complementary Tools
Pair Correlation Compare performance and examine fundamental relationship between any two equity instruments | |
Alpha Finder Use alpha and beta coefficients to find investment opportunities after accounting for the risk | |
Analyst Advice Analyst recommendations and target price estimates broken down by several categories | |
Price Ceiling Movement Calculate and plot Price Ceiling Movement for different equity instruments | |
Idea Analyzer Analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas | |
Sectors List of equity sectors categorizing publicly traded companies based on their primary business activities |