Correlation Between Ecopetrol and Caldas Gold
Can any of the company-specific risk be diversified away by investing in both Ecopetrol and Caldas Gold 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 Caldas Gold 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 Caldas Gold, you can compare the effects of market volatilities on Ecopetrol and Caldas Gold 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 Caldas Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ecopetrol and Caldas Gold.
Diversification Opportunities for Ecopetrol and Caldas Gold
-0.39 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Ecopetrol and Caldas is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Ecopetrol SA ADR and Caldas Gold in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Caldas Gold 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 Caldas Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Caldas Gold has no effect on the direction of Ecopetrol i.e., Ecopetrol and Caldas Gold go up and down completely randomly.
Pair Corralation between Ecopetrol and Caldas Gold
If you would invest 736.00 in Ecopetrol SA ADR on September 14, 2024 and sell it today you would earn a total of 95.00 from holding Ecopetrol SA ADR or generate 12.91% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 4.76% |
| Values | Daily Returns |
Ecopetrol SA ADR vs. Caldas Gold
Performance |
| Timeline |
| Ecopetrol SA ADR |
| Caldas Gold |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Ecopetrol and Caldas Gold Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ecopetrol and Caldas Gold
The main advantage of trading using opposite Ecopetrol and Caldas Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ecopetrol position performs unexpectedly, Caldas Gold 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 Caldas Gold will offset losses from the drop in Caldas Gold's long position.| Ecopetrol vs. Aquagold International | Ecopetrol vs. Thrivent High Yield | Ecopetrol vs. Morningstar Unconstrained Allocation | Ecopetrol vs. Via Renewables |
| Caldas Gold vs. SunLink Health Systems | Caldas Gold vs. Asbury Automotive Group | Caldas Gold vs. Radcom | Caldas Gold vs. US Global Investors |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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