Correlation Between Expand Energy and Ecopetrol
Can any of the company-specific risk be diversified away by investing in both Expand Energy 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 Expand Energy and Ecopetrol into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Expand Energy and Ecopetrol SA ADR, you can compare the effects of market volatilities on Expand Energy 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 Expand Energy with a short position of Ecopetrol. Check out your portfolio center. Please also check ongoing floating volatility patterns of Expand Energy and Ecopetrol.
Diversification Opportunities for Expand Energy and Ecopetrol
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Expand and Ecopetrol is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Expand Energy 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 Expand Energy 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 Expand Energy 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 Expand Energy i.e., Expand Energy and Ecopetrol go up and down completely randomly.
Pair Corralation between Expand Energy and Ecopetrol
Considering the 90-day investment horizon Expand Energy is expected to generate 1.02 times more return on investment than Ecopetrol. However, Expand Energy is 1.02 times more volatile than Ecopetrol SA ADR. It trades about 0.2 of its potential returns per unit of risk. Ecopetrol SA ADR is currently generating about 0.14 per unit of risk. If you would invest 9,258 in Expand Energy on August 18, 2025 and sell it today you would earn a total of 2,470 from holding Expand Energy or generate 26.68% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Expand Energy vs. Ecopetrol SA ADR
Performance |
| Timeline |
| Expand Energy |
| Ecopetrol SA ADR |
Expand Energy and Ecopetrol Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Expand Energy and Ecopetrol
The main advantage of trading using opposite Expand Energy and Ecopetrol positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Expand Energy 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.| Expand Energy vs. Expand Energy | Expand Energy vs. Expand Energy | Expand Energy vs. Cheniere Energy Partners | Expand Energy vs. Devon Energy |
| Ecopetrol vs. Shell PLC ADR | Ecopetrol vs. BP PLC ADR | Ecopetrol vs. Suncor Energy | Ecopetrol vs. Petroleo Brasileiro Petrobras |
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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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