Correlation Between Ecopetrol and American Acquisition
Can any of the company-specific risk be diversified away by investing in both Ecopetrol and American Acquisition 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 American Acquisition 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 American Acquisition Opportunity, you can compare the effects of market volatilities on Ecopetrol and American Acquisition 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 American Acquisition. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ecopetrol and American Acquisition.
Diversification Opportunities for Ecopetrol and American Acquisition
-0.45 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Ecopetrol and American is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding Ecopetrol SA ADR and American Acquisition Opportuni in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Acquisition 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 American Acquisition. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Acquisition has no effect on the direction of Ecopetrol i.e., Ecopetrol and American Acquisition go up and down completely randomly.
Pair Corralation between Ecopetrol and American Acquisition
If you would invest 761.00 in Ecopetrol SA ADR on September 4, 2024 and sell it today you would earn a total of 32.00 from holding Ecopetrol SA ADR or generate 4.2% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 4.76% |
| Values | Daily Returns |
Ecopetrol SA ADR vs. American Acquisition Opportuni
Performance |
| Timeline |
| Ecopetrol SA ADR |
| American Acquisition |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Ecopetrol and American Acquisition Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ecopetrol and American Acquisition
The main advantage of trading using opposite Ecopetrol and American Acquisition positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ecopetrol position performs unexpectedly, American Acquisition 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 American Acquisition will offset losses from the drop in American Acquisition's long position.| Ecopetrol vs. Petroleo Brasileiro Petrobras | Ecopetrol vs. Equinor ASA ADR | Ecopetrol vs. Eni SpA ADR | Ecopetrol vs. Cenovus Energy |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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