Correlation Between Ecopetrol and National Fuel
Can any of the company-specific risk be diversified away by investing in both Ecopetrol and National Fuel 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 National Fuel 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 National Fuel Gas, you can compare the effects of market volatilities on Ecopetrol and National Fuel 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 National Fuel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ecopetrol and National Fuel.
Diversification Opportunities for Ecopetrol and National Fuel
0.1 | Correlation Coefficient |
Average diversification
The 3 months correlation between Ecopetrol and National is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding Ecopetrol SA ADR and National Fuel Gas in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on National Fuel Gas 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 National Fuel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of National Fuel Gas has no effect on the direction of Ecopetrol i.e., Ecopetrol and National Fuel go up and down completely randomly.
Pair Corralation between Ecopetrol and National Fuel
Allowing for the 90-day total investment horizon Ecopetrol SA ADR is expected to generate 1.26 times more return on investment than National Fuel. However, Ecopetrol is 1.26 times more volatile than National Fuel Gas. It trades about 0.04 of its potential returns per unit of risk. National Fuel Gas is currently generating about 0.01 per unit of risk. If you would invest 1,055 in Ecopetrol SA ADR on January 19, 2024 and sell it today you would earn a total of 79.00 from holding Ecopetrol SA ADR or generate 7.49% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ecopetrol SA ADR vs. National Fuel Gas
Performance |
| Timeline |
| Ecopetrol SA ADR |
| National Fuel Gas |
Ecopetrol and National Fuel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ecopetrol and National Fuel
The main advantage of trading using opposite Ecopetrol and National Fuel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ecopetrol position performs unexpectedly, National Fuel 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 National Fuel will offset losses from the drop in National Fuel's long position.| Ecopetrol vs. Petroleo Brasileiro Petrobras | Ecopetrol vs. Equinor ASA ADR | Ecopetrol vs. Eni SpA ADR | Ecopetrol vs. Cenovus Energy |
| National Fuel vs. YPF Sociedad Anonima | National Fuel vs. Eni SpA ADR | National Fuel vs. Ecopetrol SA ADR | National Fuel vs. TotalEnergies SE ADR |
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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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