Correlation Between Elecnor SA and Petroleo Brasileiro
Can any of the company-specific risk be diversified away by investing in both Elecnor SA 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 Elecnor SA and Petroleo Brasileiro into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Elecnor SA and Petroleo Brasileiro SA, you can compare the effects of market volatilities on Elecnor SA 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 Elecnor SA with a short position of Petroleo Brasileiro. Check out your portfolio center. Please also check ongoing floating volatility patterns of Elecnor SA and Petroleo Brasileiro.
Diversification Opportunities for Elecnor SA and Petroleo Brasileiro
-0.51 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Elecnor and Petroleo is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding Elecnor SA and Petroleo Brasileiro SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Petroleo Brasileiro and Elecnor SA 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 Elecnor SA 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 Elecnor SA i.e., Elecnor SA and Petroleo Brasileiro go up and down completely randomly.
Pair Corralation between Elecnor SA and Petroleo Brasileiro
Assuming the 90 days trading horizon Elecnor SA is expected to generate 4.5 times less return on investment than Petroleo Brasileiro. In addition to that, Elecnor SA is 1.09 times more volatile than Petroleo Brasileiro SA. It trades about 0.05 of its total potential returns per unit of risk. Petroleo Brasileiro SA is currently generating about 0.26 per unit of volatility. If you would invest 598.00 in Petroleo Brasileiro SA on August 30, 2024 and sell it today you would earn a total of 44.00 from holding Petroleo Brasileiro SA or generate 7.36% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Elecnor SA vs. Petroleo Brasileiro SA
Performance |
| Timeline |
| Elecnor SA |
| Petroleo Brasileiro |
Elecnor SA and Petroleo Brasileiro Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Elecnor SA and Petroleo Brasileiro
The main advantage of trading using opposite Elecnor SA and Petroleo Brasileiro positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Elecnor SA 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.| Elecnor SA vs. Miquel y Costas | Elecnor SA vs. Construcciones y Auxiliar | Elecnor SA vs. Grupo Catalana Occidente | Elecnor SA vs. Tecnicas Reunidas |
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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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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