Correlation Between WestJet Airlines and Ecopetrol
Can any of the company-specific risk be diversified away by investing in both WestJet Airlines 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 WestJet Airlines and Ecopetrol into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between WestJet Airlines and Ecopetrol SA ADR, you can compare the effects of market volatilities on WestJet Airlines 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 WestJet Airlines with a short position of Ecopetrol. Check out your portfolio center. Please also check ongoing floating volatility patterns of WestJet Airlines and Ecopetrol.
Diversification Opportunities for WestJet Airlines and Ecopetrol
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between WestJet and Ecopetrol is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding WestJet Airlines 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 WestJet Airlines 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 WestJet Airlines 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 WestJet Airlines i.e., WestJet Airlines and Ecopetrol go up and down completely randomly.
Pair Corralation between WestJet Airlines and Ecopetrol
If you would invest 1,030 in Ecopetrol SA ADR on January 26, 2024 and sell it today you would earn a total of 139.00 from holding Ecopetrol SA ADR or generate 13.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 0.0% |
| Values | Daily Returns |
WestJet Airlines vs. Ecopetrol SA ADR
Performance |
| Timeline |
| WestJet Airlines |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Ecopetrol SA ADR |
WestJet Airlines and Ecopetrol Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with WestJet Airlines and Ecopetrol
The main advantage of trading using opposite WestJet Airlines and Ecopetrol positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if WestJet Airlines 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.| WestJet Airlines vs. Repligen | WestJet Airlines vs. Intchains Group Limited | WestJet Airlines vs. Micron Technology | WestJet Airlines vs. Skechers USA |
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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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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