Correlation Between Ashford Hospitality and Ecopetrol
Can any of the company-specific risk be diversified away by investing in both Ashford Hospitality 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 Ashford Hospitality and Ecopetrol into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ashford Hospitality Trust and Ecopetrol SA ADR, you can compare the effects of market volatilities on Ashford Hospitality 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 Ashford Hospitality with a short position of Ecopetrol. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ashford Hospitality and Ecopetrol.
Diversification Opportunities for Ashford Hospitality and Ecopetrol
0.05 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Ashford and Ecopetrol is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Ashford Hospitality Trust 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 Ashford Hospitality 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 Ashford Hospitality Trust 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 Ashford Hospitality i.e., Ashford Hospitality and Ecopetrol go up and down completely randomly.
Pair Corralation between Ashford Hospitality and Ecopetrol
Assuming the 90 days trading horizon Ashford Hospitality Trust is expected to generate 2.45 times more return on investment than Ecopetrol. However, Ashford Hospitality is 2.45 times more volatile than Ecopetrol SA ADR. It trades about 0.06 of its potential returns per unit of risk. Ecopetrol SA ADR is currently generating about 0.06 per unit of risk. If you would invest 1,211 in Ashford Hospitality Trust on January 25, 2024 and sell it today you would earn a total of 267.00 from holding Ashford Hospitality Trust or generate 22.05% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ashford Hospitality Trust vs. Ecopetrol SA ADR
Performance |
| Timeline |
| Ashford Hospitality Trust |
| Ecopetrol SA ADR |
Ashford Hospitality and Ecopetrol Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ashford Hospitality and Ecopetrol
The main advantage of trading using opposite Ashford Hospitality and Ecopetrol positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ashford Hospitality 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.| Ashford Hospitality vs. Ashford Hospitality Trust | Ashford Hospitality vs. Braemar Hotels Resorts | Ashford Hospitality vs. Braemar Hotels Resorts | Ashford Hospitality vs. Summit Hotel Properties |
| 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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