Correlation Between Blue Water and Petroleo Brasileiro
Can any of the company-specific risk be diversified away by investing in both Blue Water 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 Blue Water and Petroleo Brasileiro into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Blue Water Petroleum and Petroleo Brasileiro Petrobras, you can compare the effects of market volatilities on Blue Water 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 Blue Water with a short position of Petroleo Brasileiro. Check out your portfolio center. Please also check ongoing floating volatility patterns of Blue Water and Petroleo Brasileiro.
Diversification Opportunities for Blue Water and Petroleo Brasileiro
-0.62 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Blue and Petroleo is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding Blue Water Petroleum and Petroleo Brasileiro Petrobras in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Petroleo Brasileiro and Blue Water 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 Blue Water Petroleum 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 Blue Water i.e., Blue Water and Petroleo Brasileiro go up and down completely randomly.
Pair Corralation between Blue Water and Petroleo Brasileiro
Given the investment horizon of 90 days Blue Water Petroleum is expected to under-perform the Petroleo Brasileiro. In addition to that, Blue Water is 6.73 times more volatile than Petroleo Brasileiro Petrobras. It trades about -0.07 of its total potential returns per unit of risk. Petroleo Brasileiro Petrobras is currently generating about 0.0 per unit of volatility. If you would invest 1,442 in Petroleo Brasileiro Petrobras on August 25, 2024 and sell it today you would lose (27.00) from holding Petroleo Brasileiro Petrobras or give up 1.87% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 99.21% |
| Values | Daily Returns |
Blue Water Petroleum vs. Petroleo Brasileiro Petrobras
Performance |
| Timeline |
| Blue Water Petroleum |
| Petroleo Brasileiro |
Blue Water and Petroleo Brasileiro Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Blue Water and Petroleo Brasileiro
The main advantage of trading using opposite Blue Water and Petroleo Brasileiro positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Blue Water 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.| Blue Water vs. Petroleo Brasileiro Petrobras | Blue Water vs. Equinor ASA ADR | Blue Water vs. Eni SpA ADR | Blue Water vs. YPF Sociedad Anonima |
| Petroleo Brasileiro vs. Shell PLC ADR | Petroleo Brasileiro vs. Suncor Energy | Petroleo Brasileiro vs. Cenovus Energy | 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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