Correlation Between NYSE Composite and Petróleo Brasileiro
Can any of the company-specific risk be diversified away by investing in both NYSE Composite and Petróleo 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 NYSE Composite and Petróleo Brasileiro into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NYSE Composite and Petrleo Brasileiro SA, you can compare the effects of market volatilities on NYSE Composite and Petróleo 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 NYSE Composite with a short position of Petróleo Brasileiro. Check out your portfolio center. Please also check ongoing floating volatility patterns of NYSE Composite and Petróleo Brasileiro.
Diversification Opportunities for NYSE Composite and Petróleo Brasileiro
-0.27 | Correlation Coefficient |
Very good diversification
The 3 months correlation between NYSE and Petróleo is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding NYSE Composite and Petrleo Brasileiro SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Petróleo Brasileiro and NYSE Composite 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 NYSE Composite are associated (or correlated) with Petróleo Brasileiro. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Petróleo Brasileiro has no effect on the direction of NYSE Composite i.e., NYSE Composite and Petróleo Brasileiro go up and down completely randomly.
Pair Corralation between NYSE Composite and Petróleo Brasileiro
Assuming the 90 days trading horizon NYSE Composite is expected to generate 0.4 times more return on investment than Petróleo Brasileiro. However, NYSE Composite is 2.5 times less risky than Petróleo Brasileiro. It trades about 0.14 of its potential returns per unit of risk. Petrleo Brasileiro SA is currently generating about 0.0 per unit of risk. If you would invest 1,951,644 in NYSE Composite on August 31, 2024 and sell it today you would earn a total of 69,338 from holding NYSE Composite or generate 3.55% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
NYSE Composite vs. Petrleo Brasileiro SA
Performance |
| Timeline |
NYSE Composite and Petróleo Brasileiro Volatility Contrast
Predicted Return Density |
| Returns |
NYSE Composite
Pair trading matchups for NYSE Composite
Petrleo Brasileiro SA
Pair trading matchups for Petróleo Brasileiro
Pair Trading with NYSE Composite and Petróleo Brasileiro
The main advantage of trading using opposite NYSE Composite and Petróleo Brasileiro positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NYSE Composite position performs unexpectedly, Petróleo 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 Petróleo Brasileiro will offset losses from the drop in Petróleo Brasileiro's long position.| NYSE Composite vs. Nextplat Corp | NYSE Composite vs. Qualys Inc | NYSE Composite vs. Cadence Design Systems | NYSE Composite vs. Asure Software |
| Petróleo Brasileiro vs. Petroleo Brasileiro Petrobras | Petróleo Brasileiro vs. Equinor ASA ADR | Petróleo Brasileiro vs. Eni SpA ADR | Petróleo Brasileiro vs. YPF Sociedad Anonima |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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