Correlation Between Ecopetrol and Acciona SA
Can any of the company-specific risk be diversified away by investing in both Ecopetrol and Acciona SA 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 Acciona SA 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 Acciona SA, you can compare the effects of market volatilities on Ecopetrol and Acciona SA 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 Acciona SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ecopetrol and Acciona SA.
Diversification Opportunities for Ecopetrol and Acciona SA
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Ecopetrol and Acciona is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Ecopetrol SA ADR and Acciona SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Acciona SA 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 Acciona SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Acciona SA has no effect on the direction of Ecopetrol i.e., Ecopetrol and Acciona SA go up and down completely randomly.
Pair Corralation between Ecopetrol and Acciona SA
Allowing for the 90-day total investment horizon Ecopetrol SA ADR is expected to under-perform the Acciona SA. But the stock apears to be less risky and, when comparing its historical volatility, Ecopetrol SA ADR is 1.48 times less risky than Acciona SA. The stock trades about -0.03 of its potential returns per unit of risk. The Acciona SA is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest 13,972 in Acciona SA on September 1, 2024 and sell it today you would lose (1,542) from holding Acciona SA or give up 11.04% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 65.06% |
| Values | Daily Returns |
Ecopetrol SA ADR vs. Acciona SA
Performance |
| Timeline |
| Ecopetrol SA ADR |
| Acciona SA |
Ecopetrol and Acciona SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ecopetrol and Acciona SA
The main advantage of trading using opposite Ecopetrol and Acciona SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ecopetrol position performs unexpectedly, Acciona SA 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 Acciona SA will offset losses from the drop in Acciona SA's long position.| Ecopetrol vs. Shell PLC ADR | Ecopetrol vs. BP PLC ADR | Ecopetrol vs. Equinor ASA ADR | Ecopetrol vs. Petrleo Brasileiro SA |
| Acciona SA vs. Orion Group Holdings | Acciona SA vs. Agrify Corp | Acciona SA vs. Matrix Service Co | Acciona SA vs. MYR 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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