Correlation Between Ecopetrol and Network CN
Can any of the company-specific risk be diversified away by investing in both Ecopetrol and Network CN 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 Network CN 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 Network CN, you can compare the effects of market volatilities on Ecopetrol and Network CN 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 Network CN. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ecopetrol and Network CN.
Diversification Opportunities for Ecopetrol and Network CN
-0.39 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Ecopetrol and Network is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Ecopetrol SA ADR and Network CN in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Network CN 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 Network CN. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Network CN has no effect on the direction of Ecopetrol i.e., Ecopetrol and Network CN go up and down completely randomly.
Pair Corralation between Ecopetrol and Network CN
Allowing for the 90-day total investment horizon Ecopetrol SA ADR is expected to under-perform the Network CN. But the stock apears to be less risky and, when comparing its historical volatility, Ecopetrol SA ADR is 54.56 times less risky than Network CN. The stock trades about -0.05 of its potential returns per unit of risk. The Network CN is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest 4.00 in Network CN on September 4, 2024 and sell it today you would earn a total of 96.00 from holding Network CN or generate 2400.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ecopetrol SA ADR vs. Network CN
Performance |
| Timeline |
| Ecopetrol SA ADR |
| Network CN |
Ecopetrol and Network CN Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ecopetrol and Network CN
The main advantage of trading using opposite Ecopetrol and Network CN positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ecopetrol position performs unexpectedly, Network CN 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 Network CN will offset losses from the drop in Network CN's long position.| Ecopetrol vs. Petroleo Brasileiro Petrobras | Ecopetrol vs. Equinor ASA ADR | Ecopetrol vs. Eni SpA ADR | Ecopetrol vs. Cenovus Energy |
| Network CN vs. Torm PLC Class | Network CN vs. Hafnia Limited | Network CN vs. Proficient Auto Logistics, | Network CN vs. Saia 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
Other Complementary Tools
| Companies Directory Evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals | |
| Money Managers Screen money managers from public funds and ETFs managed around the world | |
| Stocks Directory Find actively traded stocks across global markets | |
| Commodity Channel Use Commodity Channel Index to analyze current equity momentum | |
| Portfolio Suggestion Get suggestions outside of your existing asset allocation including your own model portfolios |