Correlation Between Crescent Energy and Petroleo Brasileiro
Can any of the company-specific risk be diversified away by investing in both Crescent Energy 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 Crescent Energy and Petroleo Brasileiro into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Crescent Energy Co and Petroleo Brasileiro Petrobras, you can compare the effects of market volatilities on Crescent Energy 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 Crescent Energy with a short position of Petroleo Brasileiro. Check out your portfolio center. Please also check ongoing floating volatility patterns of Crescent Energy and Petroleo Brasileiro.
Diversification Opportunities for Crescent Energy and Petroleo Brasileiro
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Crescent and Petroleo is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Crescent Energy Co and Petroleo Brasileiro Petrobras in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Petroleo Brasileiro and Crescent 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 Crescent Energy Co 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 Crescent Energy i.e., Crescent Energy and Petroleo Brasileiro go up and down completely randomly.
Pair Corralation between Crescent Energy and Petroleo Brasileiro
Given the investment horizon of 90 days Crescent Energy is expected to generate 1.67 times less return on investment than Petroleo Brasileiro. In addition to that, Crescent Energy is 1.46 times more volatile than Petroleo Brasileiro Petrobras. It trades about 0.14 of its total potential returns per unit of risk. Petroleo Brasileiro Petrobras is currently generating about 0.34 per unit of volatility. If you would invest 1,324 in Petroleo Brasileiro Petrobras on November 2, 2024 and sell it today you would earn a total of 89.00 from holding Petroleo Brasileiro Petrobras or generate 6.72% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Crescent Energy Co vs. Petroleo Brasileiro Petrobras
Performance |
| Timeline |
| Crescent Energy |
| Petroleo Brasileiro |
Crescent Energy and Petroleo Brasileiro Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Crescent Energy and Petroleo Brasileiro
The main advantage of trading using opposite Crescent Energy and Petroleo Brasileiro positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Crescent Energy 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.| Crescent Energy vs. Vital Energy | Crescent Energy vs. Permian Resources | Crescent Energy vs. Magnolia Oil Gas | Crescent Energy vs. Ring Energy |
| Petroleo Brasileiro vs. Ecopetrol SA ADR | Petroleo Brasileiro vs. Equinor ASA ADR | Petroleo Brasileiro vs. Eni SpA ADR | Petroleo Brasileiro vs. Cenovus Energy |
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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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