Correlation Between INTUITIVE SURGICAL and Ecopetrol

Can any of the company-specific risk be diversified away by investing in both INTUITIVE SURGICAL 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 INTUITIVE SURGICAL and Ecopetrol into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between INTUITIVE SURGICAL and Ecopetrol SA, you can compare the effects of market volatilities on INTUITIVE SURGICAL 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 INTUITIVE SURGICAL with a short position of Ecopetrol. Check out your portfolio center. Please also check ongoing floating volatility patterns of INTUITIVE SURGICAL and Ecopetrol.

Diversification Opportunities for INTUITIVE SURGICAL and Ecopetrol

-0.45

Correlation Coefficient

INTUITIVE SURGICAL  Ecopetrol

Very good diversification

The 3 months correlation between INTUITIVE and Ecopetrol is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding INTUITIVE SURGICAL and Ecopetrol SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ecopetrol SA and INTUITIVE SURGICAL 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 INTUITIVE SURGICAL 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 has no effect on the direction of INTUITIVE SURGICAL i.e., INTUITIVE SURGICAL and Ecopetrol go up and down completely randomly.

Pair Corralation between INTUITIVE SURGICAL and Ecopetrol

Assuming the 90 days trading horizon INTUITIVE SURGICAL is expected to generate 0.83 times more return on investment than Ecopetrol. However, INTUITIVE SURGICAL is 1.21 times less risky than Ecopetrol. It trades about 0.14 of its potential returns per unit of risk. Ecopetrol SA is currently generating about -0.08 per unit of risk. If you would invest  43,495  in INTUITIVE SURGICAL on September 21, 2024 and sell it today you would earn a total of  6,995  from holding INTUITIVE SURGICAL or generate 16.08% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

INTUITIVE SURGICAL  vs.  Ecopetrol SA

INTUITIVE SURGICAL

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in INTUITIVE SURGICAL are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile technical and fundamental indicators, INTUITIVE SURGICAL exhibited solid returns over the last few months and may actually be approaching a breakup point.

Ecopetrol SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ecopetrol SA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest uncertain performance, the Stock's technical indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with INTUITIVE SURGICAL and Ecopetrol

The main advantage of trading using opposite INTUITIVE SURGICAL and Ecopetrol positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if INTUITIVE SURGICAL 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.

The idea behind INTUITIVE SURGICAL and Ecopetrol SA pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.