Correlation Between Cars and Ecopetrol
Can any of the company-specific risk be diversified away by investing in both Cars 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 Cars and Ecopetrol into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cars Inc and Ecopetrol SA, you can compare the effects of market volatilities on Cars 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 Cars with a short position of Ecopetrol. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cars and Ecopetrol.
Diversification Opportunities for Cars and Ecopetrol
Good diversification
The 3 months correlation between Cars and Ecopetrol is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding Cars Inc and Ecopetrol SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ecopetrol SA and Cars 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 Cars Inc 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 Cars i.e., Cars and Ecopetrol go up and down completely randomly.
Pair Corralation between Cars and Ecopetrol
Assuming the 90 days horizon Cars Inc is expected to generate 1.44 times more return on investment than Ecopetrol. However, Cars is 1.44 times more volatile than Ecopetrol SA. It trades about 0.36 of its potential returns per unit of risk. Ecopetrol SA is currently generating about 0.1 per unit of risk. If you would invest 1,460 in Cars Inc on August 31, 2024 and sell it today you would earn a total of 390.00 from holding Cars Inc or generate 26.71% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cars Inc vs. Ecopetrol SA
Performance |
| Timeline |
| Cars Inc |
| Ecopetrol SA |
Cars and Ecopetrol Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cars and Ecopetrol
The main advantage of trading using opposite Cars and Ecopetrol positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cars 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.| Cars vs. SALESFORCE INC CDR | Cars vs. FAST RETAIL ADR | Cars vs. Auto Trader Group | Cars vs. SHIP HEALTHCARE HLDGINC |
| Ecopetrol vs. Data3 Limited | Ecopetrol vs. National Storage Affiliates | Ecopetrol vs. Cars Inc | Ecopetrol vs. Grupo Carso SAB |
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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
Other Complementary Tools
| Portfolio File Import Quickly import all of your third-party portfolios from your local drive in csv format | |
| Portfolio Center All portfolio management and optimization tools to improve performance of your portfolios | |
| Equity Forecasting Use basic forecasting models to generate price predictions and determine price momentum | |
| Bonds Directory Find actively traded corporate debentures issued by US companies | |
| Equity Valuation Check real value of public entities based on technical and fundamental data |