Correlation Between Ecopetrol and FS Energy
Can any of the company-specific risk be diversified away by investing in both Ecopetrol and FS Energy 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 FS Energy 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 FS Energy and, you can compare the effects of market volatilities on Ecopetrol and FS Energy 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 FS Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ecopetrol and FS Energy.
Diversification Opportunities for Ecopetrol and FS Energy
Very good diversification
The 3 months correlation between Ecopetrol and FSEN is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding Ecopetrol SA ADR and FS Energy and in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FS Energy 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 FS Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FS Energy has no effect on the direction of Ecopetrol i.e., Ecopetrol and FS Energy go up and down completely randomly.
Pair Corralation between Ecopetrol and FS Energy
Allowing for the 90-day total investment horizon Ecopetrol is expected to generate 1.8 times less return on investment than FS Energy. But when comparing it to its historical volatility, Ecopetrol SA ADR is 2.33 times less risky than FS Energy. It trades about 0.02 of its potential returns per unit of risk. FS Energy and is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 239.00 in FS Energy and on October 24, 2024 and sell it today you would lose (21.00) from holding FS Energy and or give up 8.79% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ecopetrol SA ADR vs. FS Energy and
Performance |
| Timeline |
| Ecopetrol SA ADR |
| FS Energy |
Ecopetrol and FS Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ecopetrol and FS Energy
The main advantage of trading using opposite Ecopetrol and FS Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ecopetrol position performs unexpectedly, FS Energy 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 FS Energy will offset losses from the drop in FS Energy's long position.| Ecopetrol vs. Shell PLC ADR | Ecopetrol vs. BP PLC ADR | Ecopetrol vs. Suncor Energy | Ecopetrol vs. Petroleo Brasileiro Petrobras |
| FS Energy vs. Princeton Capital | FS Energy vs. Urbana | FS Energy vs. Blackhawk Growth Corp | FS Energy vs. Flow Capital 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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