Correlation Between Ecopetrol and TotalEnergies
Can any of the company-specific risk be diversified away by investing in both Ecopetrol and TotalEnergies 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 TotalEnergies 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 TotalEnergies SE ADR, you can compare the effects of market volatilities on Ecopetrol and TotalEnergies 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 TotalEnergies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ecopetrol and TotalEnergies.
Diversification Opportunities for Ecopetrol and TotalEnergies
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Ecopetrol and TotalEnergies is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Ecopetrol SA ADR and TotalEnergies SE ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TotalEnergies SE ADR 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 TotalEnergies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TotalEnergies SE ADR has no effect on the direction of Ecopetrol i.e., Ecopetrol and TotalEnergies go up and down completely randomly.
Pair Corralation between Ecopetrol and TotalEnergies
Allowing for the 90-day total investment horizon Ecopetrol SA ADR is expected to generate 1.62 times more return on investment than TotalEnergies. However, Ecopetrol is 1.62 times more volatile than TotalEnergies SE ADR. It trades about 0.06 of its potential returns per unit of risk. TotalEnergies SE ADR is currently generating about -0.29 per unit of risk. 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 | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ecopetrol SA ADR vs. TotalEnergies SE ADR
Performance |
| Timeline |
| Ecopetrol SA ADR |
| TotalEnergies SE ADR |
Ecopetrol and TotalEnergies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ecopetrol and TotalEnergies
The main advantage of trading using opposite Ecopetrol and TotalEnergies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ecopetrol position performs unexpectedly, TotalEnergies 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 TotalEnergies will offset losses from the drop in TotalEnergies' long position.| Ecopetrol vs. Eshallgo Class A | Ecopetrol vs. Amtech Systems | Ecopetrol vs. Gold Fields Ltd | Ecopetrol vs. Aegean Airlines SA |
| TotalEnergies vs. Eshallgo Class A | TotalEnergies vs. Amtech Systems | TotalEnergies vs. Gold Fields Ltd | TotalEnergies vs. Aegean Airlines SA |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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