Correlation Between Ecopetrol and Devon Energy
Can any of the company-specific risk be diversified away by investing in both Ecopetrol and Devon Energy 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 Devon Energy 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 Devon Energy, you can compare the effects of market volatilities on Ecopetrol and Devon Energy 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 Devon Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ecopetrol and Devon Energy.
Diversification Opportunities for Ecopetrol and Devon Energy
0.41 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Ecopetrol and Devon is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Ecopetrol SA ADR and Devon Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Devon Energy 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 Devon Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Devon Energy has no effect on the direction of Ecopetrol i.e., Ecopetrol and Devon Energy go up and down completely randomly.
Pair Corralation between Ecopetrol and Devon Energy
Allowing for the 90-day total investment horizon Ecopetrol SA ADR is expected to generate 0.92 times more return on investment than Devon Energy. However, Ecopetrol SA ADR is 1.08 times less risky than Devon Energy. It trades about 0.14 of its potential returns per unit of risk. Devon Energy is currently generating about 0.05 per unit of risk. If you would invest 890.00 in Ecopetrol SA ADR on August 21, 2025 and sell it today you would earn a total of 154.00 from holding Ecopetrol SA ADR or generate 17.3% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ecopetrol SA ADR vs. Devon Energy
Performance |
| Timeline |
| Ecopetrol SA ADR |
| Devon Energy |
Ecopetrol and Devon Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ecopetrol and Devon Energy
The main advantage of trading using opposite Ecopetrol and Devon Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ecopetrol position performs unexpectedly, Devon Energy 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 Devon Energy will offset losses from the drop in Devon Energy's long position.| Ecopetrol vs. Shell PLC ADR | Ecopetrol vs. BP PLC ADR | Ecopetrol vs. Suncor Energy | Ecopetrol vs. Petroleo Brasileiro Petrobras |
| Devon Energy vs. Coterra Energy | Devon Energy vs. Texas Pacific Land | Devon Energy vs. Ecopetrol SA ADR | Devon Energy vs. Venture Global, |
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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.
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