Correlation Between Ecopetrol and Smart Global
Can any of the company-specific risk be diversified away by investing in both Ecopetrol and Smart Global 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 Smart Global 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 Smart Global Holdings, you can compare the effects of market volatilities on Ecopetrol and Smart Global 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 Smart Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ecopetrol and Smart Global.
Diversification Opportunities for Ecopetrol and Smart Global
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Ecopetrol and Smart is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Ecopetrol SA ADR and Smart Global Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Smart Global Holdings 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 Smart Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Smart Global Holdings has no effect on the direction of Ecopetrol i.e., Ecopetrol and Smart Global go up and down completely randomly.
Pair Corralation between Ecopetrol and Smart Global
If you would invest 801.00 in Ecopetrol SA ADR on August 24, 2024 and sell it today you would earn a total of 18.00 from holding Ecopetrol SA ADR or generate 2.25% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 4.35% |
| Values | Daily Returns |
Ecopetrol SA ADR vs. Smart Global Holdings
Performance |
| Timeline |
| Ecopetrol SA ADR |
| Smart Global Holdings |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Ecopetrol and Smart Global Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ecopetrol and Smart Global
The main advantage of trading using opposite Ecopetrol and Smart Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ecopetrol position performs unexpectedly, Smart Global 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 Smart Global will offset losses from the drop in Smart Global's long position.| Ecopetrol vs. Eshallgo Class A | Ecopetrol vs. Amtech Systems | Ecopetrol vs. Gold Fields Ltd | Ecopetrol vs. Aegean Airlines SA |
| Smart Global vs. Silicon Motion Technology | Smart Global vs. MACOM Technology Solutions | Smart Global vs. Semtech | Smart Global vs. Alpha and Omega |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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