Correlation Between Cardinal Energy and Petroleo Brasileiro
Can any of the company-specific risk be diversified away by investing in both Cardinal 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 Cardinal 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 Cardinal Energy and Petroleo Brasileiro Petrobras, you can compare the effects of market volatilities on Cardinal 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 Cardinal Energy with a short position of Petroleo Brasileiro. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cardinal Energy and Petroleo Brasileiro.
Diversification Opportunities for Cardinal Energy and Petroleo Brasileiro
0.22 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Cardinal and Petroleo is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Cardinal Energy and Petroleo Brasileiro Petrobras in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Petroleo Brasileiro and Cardinal 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 Cardinal Energy 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 Cardinal Energy i.e., Cardinal Energy and Petroleo Brasileiro go up and down completely randomly.
Pair Corralation between Cardinal Energy and Petroleo Brasileiro
Assuming the 90 days horizon Cardinal Energy is expected to under-perform the Petroleo Brasileiro. But the pink sheet apears to be less risky and, when comparing its historical volatility, Cardinal Energy is 1.19 times less risky than Petroleo Brasileiro. The pink sheet trades about -0.02 of its potential returns per unit of risk. The Petroleo Brasileiro Petrobras is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 1,342 in Petroleo Brasileiro Petrobras on November 18, 2024 and sell it today you would earn a total of 90.00 from holding Petroleo Brasileiro Petrobras or generate 6.71% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cardinal Energy vs. Petroleo Brasileiro Petrobras
Performance |
| Timeline |
| Cardinal Energy |
| Petroleo Brasileiro |
Cardinal Energy and Petroleo Brasileiro Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cardinal Energy and Petroleo Brasileiro
The main advantage of trading using opposite Cardinal Energy and Petroleo Brasileiro positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cardinal 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.| Cardinal Energy vs. Tamarack Valley Energy | Cardinal Energy vs. Pine Cliff Energy | Cardinal Energy vs. MEG Energy Corp | Cardinal Energy vs. Headwater Exploration |
| Petroleo Brasileiro vs. TotalEnergies SE ADR | Petroleo Brasileiro vs. Equinor ASA ADR | Petroleo Brasileiro vs. Petrleo Brasileiro SA | Petroleo Brasileiro vs. Ecopetrol SA ADR |
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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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