Correlation Between Unbound Group and Ecopetrol
Can any of the company-specific risk be diversified away by investing in both Unbound Group 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 Unbound Group and Ecopetrol into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Unbound Group PLC and Ecopetrol SA ADR, you can compare the effects of market volatilities on Unbound Group 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 Unbound Group with a short position of Ecopetrol. Check out your portfolio center. Please also check ongoing floating volatility patterns of Unbound Group and Ecopetrol.
Diversification Opportunities for Unbound Group and Ecopetrol
-0.02 | Correlation Coefficient |
Good diversification
The 3 months correlation between Unbound and Ecopetrol is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding Unbound Group PLC 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 Unbound Group 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 Unbound Group PLC 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 Unbound Group i.e., Unbound Group and Ecopetrol go up and down completely randomly.
Pair Corralation between Unbound Group and Ecopetrol
Assuming the 90 days horizon Unbound Group PLC is expected to generate 32.3 times more return on investment than Ecopetrol. However, Unbound Group is 32.3 times more volatile than Ecopetrol SA ADR. It trades about 0.07 of its potential returns per unit of risk. Ecopetrol SA ADR is currently generating about 0.01 per unit of risk. If you would invest 3,750 in Unbound Group PLC on January 26, 2024 and sell it today you would lose (3,575) from holding Unbound Group PLC or give up 95.33% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 58.3% |
| Values | Daily Returns |
Unbound Group PLC vs. Ecopetrol SA ADR
Performance |
| Timeline |
| Unbound Group PLC |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Ecopetrol SA ADR |
Unbound Group and Ecopetrol Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Unbound Group and Ecopetrol
The main advantage of trading using opposite Unbound Group and Ecopetrol positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Unbound Group 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.| Unbound Group vs. Joby Aviation | Unbound Group vs. Axalta Coating Systems | Unbound Group vs. Ecovyst | Unbound Group vs. Valhi Inc |
| Ecopetrol vs. Shell PLC ADR | Ecopetrol vs. Suncor Energy | Ecopetrol vs. TotalEnergies SE ADR | Ecopetrol vs. Petrleo Brasileiro SA |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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