Correlation Between Banco Do and Petroreconcavo
Can any of the company-specific risk be diversified away by investing in both Banco Do and Petroreconcavo 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 Banco Do and Petroreconcavo into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Banco do Estado and Petroreconcavo SA, you can compare the effects of market volatilities on Banco Do and Petroreconcavo 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 Banco Do with a short position of Petroreconcavo. Check out your portfolio center. Please also check ongoing floating volatility patterns of Banco Do and Petroreconcavo.
Diversification Opportunities for Banco Do and Petroreconcavo
-0.4 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Banco and Petroreconcavo is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Banco do Estado and Petroreconcavo SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Petroreconcavo SA and Banco Do 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 Banco do Estado are associated (or correlated) with Petroreconcavo. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Petroreconcavo SA has no effect on the direction of Banco Do i.e., Banco Do and Petroreconcavo go up and down completely randomly.
Pair Corralation between Banco Do and Petroreconcavo
Assuming the 90 days trading horizon Banco do Estado is expected to under-perform the Petroreconcavo. But the preferred stock apears to be less risky and, when comparing its historical volatility, Banco do Estado is 1.54 times less risky than Petroreconcavo. The preferred stock trades about -0.01 of its potential returns per unit of risk. The Petroreconcavo SA is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 1,547 in Petroreconcavo SA on August 30, 2024 and sell it today you would earn a total of 119.00 from holding Petroreconcavo SA or generate 7.69% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Banco do Estado vs. Petroreconcavo SA
Performance |
| Timeline |
| Banco do Estado |
| Petroreconcavo SA |
Banco Do and Petroreconcavo Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Banco Do and Petroreconcavo
The main advantage of trading using opposite Banco Do and Petroreconcavo positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Banco Do position performs unexpectedly, Petroreconcavo 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 Petroreconcavo will offset losses from the drop in Petroreconcavo's long position.| Banco Do vs. Prudential Financial | Banco Do vs. Ameriprise Financial | Banco Do vs. Lloyds Banking Group | Banco Do vs. Unifique Telecomunicaes SA |
| Petroreconcavo vs. Petro Rio SA | Petroreconcavo vs. Banco BTG Pactual | Petroreconcavo vs. Ambipar Participaes e | Petroreconcavo vs. Mliuz 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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