Correlation Between Bancolombia and Eco Growth
Can any of the company-specific risk be diversified away by investing in both Bancolombia and Eco Growth 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 Bancolombia and Eco Growth into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bancolombia SA ADR and Eco Growth Strategies, you can compare the effects of market volatilities on Bancolombia and Eco Growth 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 Bancolombia with a short position of Eco Growth. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bancolombia and Eco Growth.
Diversification Opportunities for Bancolombia and Eco Growth
-0.46 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Bancolombia and Eco is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding Bancolombia SA ADR and Eco Growth Strategies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eco Growth Strategies and Bancolombia 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 Bancolombia SA ADR are associated (or correlated) with Eco Growth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eco Growth Strategies has no effect on the direction of Bancolombia i.e., Bancolombia and Eco Growth go up and down completely randomly.
Pair Corralation between Bancolombia and Eco Growth
Considering the 90-day investment horizon Bancolombia SA ADR is expected to under-perform the Eco Growth. But the stock apears to be less risky and, when comparing its historical volatility, Bancolombia SA ADR is 16.82 times less risky than Eco Growth. The stock trades about -0.01 of its potential returns per unit of risk. The Eco Growth Strategies is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 4.70 in Eco Growth Strategies on October 6, 2024 and sell it today you would earn a total of 0.20 from holding Eco Growth Strategies or generate 4.26% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Very Weak |
Accuracy | 95.24% |
Values | Daily Returns |
Bancolombia SA ADR vs. Eco Growth Strategies
Performance |
Timeline |
Bancolombia SA ADR |
Eco Growth Strategies |
Bancolombia and Eco Growth Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Bancolombia and Eco Growth
The main advantage of trading using opposite Bancolombia and Eco Growth positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bancolombia position performs unexpectedly, Eco Growth 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 Eco Growth will offset losses from the drop in Eco Growth's long position.Bancolombia vs. Banco De Chile | Bancolombia vs. Banco Bradesco SA | Bancolombia vs. Banco Santander Chile | Bancolombia vs. Intercorp Financial Services |
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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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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