Correlation Between Ecopetrol and G6 Materials
Can any of the company-specific risk be diversified away by investing in both Ecopetrol and G6 Materials 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 G6 Materials 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 G6 Materials Corp, you can compare the effects of market volatilities on Ecopetrol and G6 Materials 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 G6 Materials. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ecopetrol and G6 Materials.
Diversification Opportunities for Ecopetrol and G6 Materials
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Ecopetrol and GPHBF is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Ecopetrol SA ADR and G6 Materials Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on G6 Materials Corp 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 G6 Materials. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of G6 Materials Corp has no effect on the direction of Ecopetrol i.e., Ecopetrol and G6 Materials go up and down completely randomly.
Pair Corralation between Ecopetrol and G6 Materials
Allowing for the 90-day total investment horizon Ecopetrol is expected to generate 49.66 times less return on investment than G6 Materials. But when comparing it to its historical volatility, Ecopetrol SA ADR is 30.42 times less risky than G6 Materials. It trades about 0.03 of its potential returns per unit of risk. G6 Materials Corp is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 37.00 in G6 Materials Corp on August 30, 2024 and sell it today you would lose (34.50) from holding G6 Materials Corp or give up 93.24% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ecopetrol SA ADR vs. G6 Materials Corp
Performance |
| Timeline |
| Ecopetrol SA ADR |
| G6 Materials Corp |
Ecopetrol and G6 Materials Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ecopetrol and G6 Materials
The main advantage of trading using opposite Ecopetrol and G6 Materials positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ecopetrol position performs unexpectedly, G6 Materials 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 G6 Materials will offset losses from the drop in G6 Materials' long position.| Ecopetrol vs. Petroleo Brasileiro Petrobras | Ecopetrol vs. Equinor ASA ADR | Ecopetrol vs. Eni SpA ADR | Ecopetrol vs. Cenovus Energy |
| G6 Materials vs. Akzo Nobel NV | G6 Materials vs. Avoca LLC | G6 Materials vs. Arkema SA ADR | G6 Materials vs. HUMANA INC |
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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
Other Complementary Tools
| Equity Search Search for actively traded equities including funds and ETFs from over 30 global markets | |
| Share Portfolio Track or share privately all of your investments from the convenience of any device | |
| Stock Tickers Use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites | |
| Pair Correlation Compare performance and examine fundamental relationship between any two equity instruments | |
| Pattern Recognition Use different Pattern Recognition models to time the market across multiple global exchanges |