Correlation Between Dassault Aviation and Ecopetrol
Can any of the company-specific risk be diversified away by investing in both Dassault Aviation and Ecopetrol 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 Dassault Aviation and Ecopetrol into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dassault Aviation SA and Ecopetrol SA ADR, you can compare the effects of market volatilities on Dassault Aviation and Ecopetrol 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 Dassault Aviation with a short position of Ecopetrol. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dassault Aviation and Ecopetrol.
Diversification Opportunities for Dassault Aviation and Ecopetrol
0.12 | Correlation Coefficient |
Average diversification
The 3 months correlation between Dassault and Ecopetrol is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding Dassault Aviation SA and Ecopetrol SA ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ecopetrol SA ADR and Dassault Aviation 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 Dassault Aviation SA are associated (or correlated) with Ecopetrol. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ecopetrol SA ADR has no effect on the direction of Dassault Aviation i.e., Dassault Aviation and Ecopetrol go up and down completely randomly.
Pair Corralation between Dassault Aviation and Ecopetrol
Assuming the 90 days horizon Dassault Aviation SA is expected to generate 1.16 times more return on investment than Ecopetrol. However, Dassault Aviation is 1.16 times more volatile than Ecopetrol SA ADR. It trades about 0.03 of its potential returns per unit of risk. Ecopetrol SA ADR is currently generating about 0.01 per unit of risk. If you would invest 16,660 in Dassault Aviation SA on January 17, 2024 and sell it today you would earn a total of 5,615 from holding Dassault Aviation SA or generate 33.7% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 99.6% |
| Values | Daily Returns |
Dassault Aviation SA vs. Ecopetrol SA ADR
Performance |
| Timeline |
| Dassault Aviation |
| Ecopetrol SA ADR |
Dassault Aviation and Ecopetrol Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dassault Aviation and Ecopetrol
The main advantage of trading using opposite Dassault Aviation and Ecopetrol positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dassault Aviation position performs unexpectedly, Ecopetrol 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 Ecopetrol will offset losses from the drop in Ecopetrol's long position.| Dassault Aviation vs. Firan Technology Group | Dassault Aviation vs. Sky Harbour Group | Dassault Aviation vs. VirTra Inc | Dassault Aviation vs. Virgin Galactic Holdings |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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