Correlation Between Petrleo Brasileiro and Exxon
Can any of the company-specific risk be diversified away by investing in both Petrleo Brasileiro and Exxon 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 Petrleo Brasileiro and Exxon 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 Exxon Mobil Corp, you can compare the effects of market volatilities on Petrleo Brasileiro and Exxon 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 Petrleo Brasileiro with a short position of Exxon. Check out your portfolio center. Please also check ongoing floating volatility patterns of Petrleo Brasileiro and Exxon.
Diversification Opportunities for Petrleo Brasileiro and Exxon
0.52 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Petrleo and Exxon is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Petrleo Brasileiro SA and Exxon Mobil Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Exxon Mobil Corp and Petrleo 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 Exxon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Exxon Mobil Corp has no effect on the direction of Petrleo Brasileiro i.e., Petrleo Brasileiro and Exxon go up and down completely randomly.
Pair Corralation between Petrleo Brasileiro and Exxon
Assuming the 90 days horizon Petrleo Brasileiro SA is expected to generate 1.47 times more return on investment than Exxon. However, Petrleo Brasileiro is 1.47 times more volatile than Exxon Mobil Corp. It trades about 0.07 of its potential returns per unit of risk. Exxon Mobil Corp is currently generating about 0.02 per unit of risk. If you would invest 618.00 in Petrleo Brasileiro SA on September 25, 2024 and sell it today you would earn a total of 577.00 from holding Petrleo Brasileiro SA or generate 93.37% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Petrleo Brasileiro SA vs. Exxon Mobil Corp
Performance |
| Timeline |
| Petrleo Brasileiro |
| Exxon Mobil Corp |
Petrleo Brasileiro and Exxon Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Petrleo Brasileiro and Exxon
The main advantage of trading using opposite Petrleo Brasileiro and Exxon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Petrleo Brasileiro position performs unexpectedly, Exxon 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 Exxon will offset losses from the drop in Exxon's long position.| Petrleo Brasileiro vs. Petroleo Brasileiro Petrobras | Petrleo Brasileiro vs. Equinor ASA ADR | Petrleo Brasileiro vs. Eni SpA ADR | Petrleo Brasileiro vs. YPF Sociedad Anonima |
| Exxon vs. Shell PLC ADR | Exxon vs. BP PLC ADR | Exxon vs. Suncor Energy | Exxon vs. Petroleo Brasileiro Petrobras |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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