Correlation Between Ecopetrol and Emclaire Financial
Can any of the company-specific risk be diversified away by investing in both Ecopetrol and Emclaire Financial 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 Emclaire Financial 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 Emclaire Financial Corp, you can compare the effects of market volatilities on Ecopetrol and Emclaire Financial 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 Emclaire Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ecopetrol and Emclaire Financial.
Diversification Opportunities for Ecopetrol and Emclaire Financial
-0.48 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Ecopetrol and Emclaire is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding Ecopetrol SA ADR and Emclaire Financial Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Emclaire Financial 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 Emclaire Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Emclaire Financial Corp has no effect on the direction of Ecopetrol i.e., Ecopetrol and Emclaire Financial go up and down completely randomly.
Pair Corralation between Ecopetrol and Emclaire Financial
Allowing for the 90-day total investment horizon Ecopetrol SA ADR is expected to generate 0.31 times more return on investment than Emclaire Financial. However, Ecopetrol SA ADR is 3.18 times less risky than Emclaire Financial. It trades about 0.02 of its potential returns per unit of risk. Emclaire Financial Corp is currently generating about -0.07 per unit of risk. If you would invest 1,001 in Ecopetrol SA ADR on February 7, 2024 and sell it today you would earn a total of 160.00 from holding Ecopetrol SA ADR or generate 15.98% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Very Weak |
Accuracy | 34.41% |
Values | Daily Returns |
Ecopetrol SA ADR vs. Emclaire Financial Corp
Performance |
Timeline |
Ecopetrol SA ADR |
Emclaire Financial Corp |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Ecopetrol and Emclaire Financial Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Ecopetrol and Emclaire Financial
The main advantage of trading using opposite Ecopetrol and Emclaire Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ecopetrol position performs unexpectedly, Emclaire Financial 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 Emclaire Financial will offset losses from the drop in Emclaire Financial's long position.Ecopetrol vs. Aquagold International | Ecopetrol vs. Morningstar Unconstrained Allocation | Ecopetrol vs. Thrivent High Yield | Ecopetrol vs. Via Renewables |
Emclaire Financial vs. Arrow Electronics | Emclaire Financial vs. Arch Capital Group | Emclaire Financial vs. Direct Line Insurance | Emclaire Financial vs. Brp Group |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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