Correlation Between Aegon Funding and Petroleo Brasileiro
Can any of the company-specific risk be diversified away by investing in both Aegon Funding and Petroleo Brasileiro 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 Aegon Funding and Petroleo Brasileiro into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Aegon Funding and Petroleo Brasileiro Petrobras, you can compare the effects of market volatilities on Aegon Funding and Petroleo Brasileiro 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 Aegon Funding with a short position of Petroleo Brasileiro. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aegon Funding and Petroleo Brasileiro.
Diversification Opportunities for Aegon Funding and Petroleo Brasileiro
0.53 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Aegon and Petroleo is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Aegon Funding and Petroleo Brasileiro Petrobras in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Petroleo Brasileiro and Aegon Funding 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 Aegon Funding are associated (or correlated) with Petroleo Brasileiro. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Petroleo Brasileiro has no effect on the direction of Aegon Funding i.e., Aegon Funding and Petroleo Brasileiro go up and down completely randomly.
Pair Corralation between Aegon Funding and Petroleo Brasileiro
Given the investment horizon of 90 days Aegon Funding is expected to generate 0.56 times more return on investment than Petroleo Brasileiro. However, Aegon Funding is 1.77 times less risky than Petroleo Brasileiro. It trades about 0.01 of its potential returns per unit of risk. Petroleo Brasileiro Petrobras is currently generating about -0.04 per unit of risk. If you would invest 2,175 in Aegon Funding on September 2, 2024 and sell it today you would earn a total of 4.00 from holding Aegon Funding or generate 0.18% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Aegon Funding vs. Petroleo Brasileiro Petrobras
Performance |
| Timeline |
| Aegon Funding |
| Petroleo Brasileiro |
Aegon Funding and Petroleo Brasileiro Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aegon Funding and Petroleo Brasileiro
The main advantage of trading using opposite Aegon Funding and Petroleo Brasileiro positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aegon Funding position performs unexpectedly, Petroleo Brasileiro 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 Petroleo Brasileiro will offset losses from the drop in Petroleo Brasileiro's long position.| Aegon Funding vs. Stepan Company | Aegon Funding vs. Nomura Holdings ADR | Aegon Funding vs. Luxfer Holdings PLC | Aegon Funding vs. Alvarium Tiedemann Holdings |
| Petroleo Brasileiro vs. Shell PLC ADR | Petroleo Brasileiro vs. Equinor ASA ADR | Petroleo Brasileiro vs. Petrleo Brasileiro SA |
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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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