Correlation Between Petróleo Brasileiro and Petroleo Brasileiro
Can any of the company-specific risk be diversified away by investing in both Petróleo Brasileiro 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 Petróleo Brasileiro and Petroleo Brasileiro into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Petrleo Brasileiro SA and Petroleo Brasileiro Petrobras, you can compare the effects of market volatilities on Petróleo Brasileiro 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 Petróleo Brasileiro with a short position of Petroleo Brasileiro. Check out your portfolio center. Please also check ongoing floating volatility patterns of Petróleo Brasileiro and Petroleo Brasileiro.
Diversification Opportunities for Petróleo Brasileiro and Petroleo Brasileiro
0.98 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Petróleo and Petroleo is 0.98. Overlapping area represents the amount of risk that can be diversified away by holding Petrleo Brasileiro SA and Petroleo Brasileiro Petrobras in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Petroleo Brasileiro and Petróleo Brasileiro 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 Petrleo Brasileiro 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 Petróleo Brasileiro i.e., Petróleo Brasileiro and Petroleo Brasileiro go up and down completely randomly.
Pair Corralation between Petróleo Brasileiro and Petroleo Brasileiro
Assuming the 90 days horizon Petrleo Brasileiro SA is expected to generate 0.9 times more return on investment than Petroleo Brasileiro. However, Petrleo Brasileiro SA is 1.11 times less risky than Petroleo Brasileiro. It trades about 0.24 of its potential returns per unit of risk. Petroleo Brasileiro Petrobras is currently generating about 0.21 per unit of risk. If you would invest 1,259 in Petrleo Brasileiro SA on August 28, 2024 and sell it today you would earn a total of 93.00 from holding Petrleo Brasileiro SA or generate 7.39% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Petrleo Brasileiro SA vs. Petroleo Brasileiro Petrobras
Performance |
| Timeline |
| Petróleo Brasileiro |
| Petroleo Brasileiro |
Petróleo Brasileiro and Petroleo Brasileiro Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Petróleo Brasileiro and Petroleo Brasileiro
The main advantage of trading using opposite Petróleo Brasileiro and Petroleo Brasileiro positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Petróleo Brasileiro 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.| 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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