Correlation Between Choice Hotels and Ecopetrol
Can any of the company-specific risk be diversified away by investing in both Choice Hotels 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 Choice Hotels and Ecopetrol into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Choice Hotels International and Ecopetrol SA ADR, you can compare the effects of market volatilities on Choice Hotels 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 Choice Hotels with a short position of Ecopetrol. Check out your portfolio center. Please also check ongoing floating volatility patterns of Choice Hotels and Ecopetrol.
Diversification Opportunities for Choice Hotels and Ecopetrol
-0.51 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Choice and Ecopetrol is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding Choice Hotels International 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 Choice Hotels 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 Choice Hotels International 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 Choice Hotels i.e., Choice Hotels and Ecopetrol go up and down completely randomly.
Pair Corralation between Choice Hotels and Ecopetrol
Considering the 90-day investment horizon Choice Hotels International is expected to under-perform the Ecopetrol. In addition to that, Choice Hotels is 1.02 times more volatile than Ecopetrol SA ADR. It trades about -0.19 of its total potential returns per unit of risk. Ecopetrol SA ADR is currently generating about 0.1 per unit of volatility. If you would invest 908.00 in Ecopetrol SA ADR on September 5, 2025 and sell it today you would earn a total of 108.00 from holding Ecopetrol SA ADR or generate 11.89% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 98.44% |
| Values | Daily Returns |
Choice Hotels International vs. Ecopetrol SA ADR
Performance |
| Timeline |
| Choice Hotels Intern |
| Ecopetrol SA ADR |
Choice Hotels and Ecopetrol Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Choice Hotels and Ecopetrol
The main advantage of trading using opposite Choice Hotels and Ecopetrol positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Choice Hotels 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.| Choice Hotels vs. BCP Investment Corp | Choice Hotels vs. AG Mortgage Investment | Choice Hotels vs. MGIC Investment Corp | Choice Hotels vs. Atrium Mortgage Investment |
| Ecopetrol vs. Bangkok Dusit Medical | Ecopetrol vs. Hemisphere Energy | Ecopetrol vs. United Internet AG | Ecopetrol vs. Freedom Internet Group |
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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