Correlation Between Petróleo Brasileiro and Transportadora
Can any of the company-specific risk be diversified away by investing in both Petróleo Brasileiro and Transportadora 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 Transportadora 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 Transportadora de Gas, you can compare the effects of market volatilities on Petróleo Brasileiro and Transportadora 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 Transportadora. Check out your portfolio center. Please also check ongoing floating volatility patterns of Petróleo Brasileiro and Transportadora.
Diversification Opportunities for Petróleo Brasileiro and Transportadora
-0.38 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Petróleo and Transportadora is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding Petrleo Brasileiro SA and Transportadora de Gas in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Transportadora de Gas 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 Transportadora. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Transportadora de Gas has no effect on the direction of Petróleo Brasileiro i.e., Petróleo Brasileiro and Transportadora go up and down completely randomly.
Pair Corralation between Petróleo Brasileiro and Transportadora
Assuming the 90 days horizon Petróleo Brasileiro is expected to generate 1.42 times less return on investment than Transportadora. But when comparing it to its historical volatility, Petrleo Brasileiro SA is 1.7 times less risky than Transportadora. It trades about 0.08 of its potential returns per unit of risk. Transportadora de Gas is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 1,212 in Transportadora de Gas on August 28, 2024 and sell it today you would earn a total of 1,692 from holding Transportadora de Gas or generate 139.6% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Petrleo Brasileiro SA vs. Transportadora de Gas
Performance |
| Timeline |
| Petróleo Brasileiro |
| Transportadora de Gas |
Petróleo Brasileiro and Transportadora Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Petróleo Brasileiro and Transportadora
The main advantage of trading using opposite Petróleo Brasileiro and Transportadora positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Petróleo Brasileiro position performs unexpectedly, Transportadora 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 Transportadora will offset losses from the drop in Transportadora's long position.| Petróleo Brasileiro vs. Vital Energy | Petróleo Brasileiro vs. Permian Resources | Petróleo Brasileiro vs. Magnolia Oil Gas | Petróleo Brasileiro vs. Ring Energy |
| Transportadora vs. Petroleo Brasileiro Petrobras | Transportadora vs. Ecopetrol SA ADR | Transportadora vs. Petrleo Brasileiro SA | Transportadora vs. Equinor ASA 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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