Correlation Between Ecopetrol and Delek
Can any of the company-specific risk be diversified away by investing in both Ecopetrol and Delek 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 Delek 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 Delek Group, you can compare the effects of market volatilities on Ecopetrol and Delek 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 Delek. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ecopetrol and Delek.
Diversification Opportunities for Ecopetrol and Delek
Excellent diversification
The 3 months correlation between Ecopetrol and Delek is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding Ecopetrol SA ADR and Delek Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Delek Group 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 Delek. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Delek Group has no effect on the direction of Ecopetrol i.e., Ecopetrol and Delek go up and down completely randomly.
Pair Corralation between Ecopetrol and Delek
Allowing for the 90-day total investment horizon Ecopetrol is expected to generate 3.49 times less return on investment than Delek. In addition to that, Ecopetrol is 1.33 times more volatile than Delek Group. It trades about 0.06 of its total potential returns per unit of risk. Delek Group is currently generating about 0.29 per unit of volatility. If you would invest 1,126 in Delek Group on August 24, 2024 and sell it today you would earn a total of 104.00 from holding Delek Group or generate 9.24% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ecopetrol SA ADR vs. Delek Group
Performance |
| Timeline |
| Ecopetrol SA ADR |
| Delek Group |
Ecopetrol and Delek Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ecopetrol and Delek
The main advantage of trading using opposite Ecopetrol and Delek positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ecopetrol position performs unexpectedly, Delek 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 Delek will offset losses from the drop in Delek's long position.| Ecopetrol vs. Petroleo Brasileiro Petrobras | Ecopetrol vs. Equinor ASA ADR | Ecopetrol vs. Eni SpA ADR | Ecopetrol vs. Cenovus Energy |
| Delek vs. Valeura Energy | Delek vs. Gulf Keystone Petroleum | Delek vs. Inpex Corp ADR | Delek vs. Spartan Delta Corp |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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