Correlation Between Ecopetrol and KeyCorp
Can any of the company-specific risk be diversified away by investing in both Ecopetrol and KeyCorp 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 Ecopetrol and KeyCorp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ecopetrol SA ADR and KeyCorp, you can compare the effects of market volatilities on Ecopetrol and KeyCorp 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 Ecopetrol with a short position of KeyCorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ecopetrol and KeyCorp.
Diversification Opportunities for Ecopetrol and KeyCorp
Poor diversification
The 3 months correlation between Ecopetrol and KeyCorp is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Ecopetrol SA ADR and KeyCorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KeyCorp and Ecopetrol 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 Ecopetrol SA ADR are associated (or correlated) with KeyCorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KeyCorp has no effect on the direction of Ecopetrol i.e., Ecopetrol and KeyCorp go up and down completely randomly.
Pair Corralation between Ecopetrol and KeyCorp
Allowing for the 90-day total investment horizon Ecopetrol SA ADR is expected to generate 1.05 times more return on investment than KeyCorp. However, Ecopetrol is 1.05 times more volatile than KeyCorp. It trades about 0.03 of its potential returns per unit of risk. KeyCorp is currently generating about -0.04 per unit of risk. If you would invest 858.00 in Ecopetrol SA ADR on July 25, 2025 and sell it today you would earn a total of 17.00 from holding Ecopetrol SA ADR or generate 1.98% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ecopetrol SA ADR vs. KeyCorp
Performance |
| Timeline |
| Ecopetrol SA ADR |
| KeyCorp |
Ecopetrol and KeyCorp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ecopetrol and KeyCorp
The main advantage of trading using opposite Ecopetrol and KeyCorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ecopetrol position performs unexpectedly, KeyCorp 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 KeyCorp will offset losses from the drop in KeyCorp's long position.| Ecopetrol vs. Tenaris SA ADR | Ecopetrol vs. Coterra Energy | Ecopetrol vs. Halliburton | Ecopetrol vs. Devon Energy |
| KeyCorp vs. Zions Bancorporation | KeyCorp vs. Huntington Bancshares Incorporated | KeyCorp vs. Comerica Incorporated | KeyCorp vs. Western Alliance Bancorporation |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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