Correlation Between Deutsche Post and Ecopetrol
Can any of the company-specific risk be diversified away by investing in both Deutsche Post 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 Deutsche Post and Ecopetrol into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Deutsche Post AG and Ecopetrol SA ADR, you can compare the effects of market volatilities on Deutsche Post 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 Deutsche Post with a short position of Ecopetrol. Check out your portfolio center. Please also check ongoing floating volatility patterns of Deutsche Post and Ecopetrol.
Diversification Opportunities for Deutsche Post and Ecopetrol
0.08 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Deutsche and Ecopetrol is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding Deutsche Post AG 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 Deutsche Post 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 Deutsche Post AG 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 Deutsche Post i.e., Deutsche Post and Ecopetrol go up and down completely randomly.
Pair Corralation between Deutsche Post and Ecopetrol
Assuming the 90 days horizon Deutsche Post AG is expected to under-perform the Ecopetrol. But the pink sheet apears to be less risky and, when comparing its historical volatility, Deutsche Post AG is 1.61 times less risky than Ecopetrol. The pink sheet trades about -0.18 of its potential returns per unit of risk. The Ecopetrol SA ADR is currently generating about 0.28 of returns per unit of risk over similar time horizon. If you would invest 1,035 in Ecopetrol SA ADR on January 24, 2024 and sell it today you would earn a total of 122.00 from holding Ecopetrol SA ADR or generate 11.79% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Deutsche Post AG vs. Ecopetrol SA ADR
Performance |
| Timeline |
| Deutsche Post AG |
| Ecopetrol SA ADR |
Deutsche Post and Ecopetrol Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Deutsche Post and Ecopetrol
The main advantage of trading using opposite Deutsche Post and Ecopetrol positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Deutsche Post 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.| Deutsche Post vs. CH Robinson Worldwide | Deutsche Post vs. United Parcel Service | Deutsche Post vs. Expeditors International of | Deutsche Post vs. JB Hunt Transport |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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