Correlation Between JD SPORTS and Ecopetrol
Can any of the company-specific risk be diversified away by investing in both JD SPORTS 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 JD SPORTS and Ecopetrol into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between JD SPORTS FASH and Ecopetrol SA, you can compare the effects of market volatilities on JD SPORTS 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 JD SPORTS with a short position of Ecopetrol. Check out your portfolio center. Please also check ongoing floating volatility patterns of JD SPORTS and Ecopetrol.
Diversification Opportunities for JD SPORTS and Ecopetrol
Excellent diversification
The 3 months correlation between 9JD and Ecopetrol is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding JD SPORTS FASH and Ecopetrol SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ecopetrol SA and JD SPORTS 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 JD SPORTS FASH 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 has no effect on the direction of JD SPORTS i.e., JD SPORTS and Ecopetrol go up and down completely randomly.
Pair Corralation between JD SPORTS and Ecopetrol
Assuming the 90 days horizon JD SPORTS FASH is expected to under-perform the Ecopetrol. But the stock apears to be less risky and, when comparing its historical volatility, JD SPORTS FASH is 1.39 times less risky than Ecopetrol. The stock trades about -0.04 of its potential returns per unit of risk. The Ecopetrol SA is currently generating about 0.47 of returns per unit of risk over similar time horizon. If you would invest 754.00 in Ecopetrol SA on November 27, 2024 and sell it today you would earn a total of 226.00 from holding Ecopetrol SA or generate 29.97% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
JD SPORTS FASH vs. Ecopetrol SA
Performance |
| Timeline |
| JD SPORTS FASH |
| Ecopetrol SA |
JD SPORTS and Ecopetrol Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with JD SPORTS and Ecopetrol
The main advantage of trading using opposite JD SPORTS and Ecopetrol positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if JD SPORTS 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.| JD SPORTS vs. COMPUTERSHARE | JD SPORTS vs. Computer And Technologies | JD SPORTS vs. UNITED INTERNET N | JD SPORTS vs. Check Point Software |
| Ecopetrol vs. Sanyo Chemical Industries | Ecopetrol vs. TIANDE CHEMICAL | Ecopetrol vs. Silicon Motion Technology | Ecopetrol vs. INTER CARS 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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