Correlation Between Industria and Petroleo Brasileiro
Can any of the company-specific risk be diversified away by investing in both Industria 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 Industria and Petroleo Brasileiro into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Industria de Diseno and Petroleo Brasileiro SA, you can compare the effects of market volatilities on Industria 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 Industria with a short position of Petroleo Brasileiro. Check out your portfolio center. Please also check ongoing floating volatility patterns of Industria and Petroleo Brasileiro.
Diversification Opportunities for Industria and Petroleo Brasileiro
-0.4 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Industria and Petroleo is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Industria de Diseno and Petroleo Brasileiro SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Petroleo Brasileiro and Industria 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 Industria de Diseno 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 Industria i.e., Industria and Petroleo Brasileiro go up and down completely randomly.
Pair Corralation between Industria and Petroleo Brasileiro
Assuming the 90 days trading horizon Industria de Diseno is expected to under-perform the Petroleo Brasileiro. But the stock apears to be less risky and, when comparing its historical volatility, Industria de Diseno is 1.15 times less risky than Petroleo Brasileiro. The stock trades about -0.09 of its potential returns per unit of risk. The Petroleo Brasileiro SA is currently generating about 0.3 of returns per unit of risk over similar time horizon. If you would invest 602.00 in Petroleo Brasileiro SA on August 28, 2024 and sell it today you would earn a total of 50.00 from holding Petroleo Brasileiro SA or generate 8.31% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Industria de Diseno vs. Petroleo Brasileiro SA
Performance |
| Timeline |
| Industria de Diseno |
| Petroleo Brasileiro |
Industria and Petroleo Brasileiro Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Industria and Petroleo Brasileiro
The main advantage of trading using opposite Industria and Petroleo Brasileiro positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Industria 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.| Industria vs. Iberdrola SA | Industria vs. Repsol | Industria vs. Banco Santander | Industria vs. ACS Actividades de |
| Petroleo Brasileiro vs. Repsol | Petroleo Brasileiro vs. Metrovacesa SA | Petroleo Brasileiro vs. Elecnor SA | Petroleo Brasileiro vs. Mapfre |
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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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