Correlation Between Petroleo Brasileiro and Vivendi SA
Can any of the company-specific risk be diversified away by investing in both Petroleo Brasileiro and Vivendi SA 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 Petroleo Brasileiro and Vivendi SA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Petroleo Brasileiro Petrobras and Vivendi SA, you can compare the effects of market volatilities on Petroleo Brasileiro and Vivendi SA 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 Petroleo Brasileiro with a short position of Vivendi SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Petroleo Brasileiro and Vivendi SA.
Diversification Opportunities for Petroleo Brasileiro and Vivendi SA
0.22 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Petroleo and Vivendi is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Petroleo Brasileiro Petrobras and Vivendi SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vivendi SA and Petroleo 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 Petroleo Brasileiro Petrobras are associated (or correlated) with Vivendi SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vivendi SA has no effect on the direction of Petroleo Brasileiro i.e., Petroleo Brasileiro and Vivendi SA go up and down completely randomly.
Pair Corralation between Petroleo Brasileiro and Vivendi SA
Considering the 90-day investment horizon Petroleo Brasileiro Petrobras is expected to generate 1.54 times more return on investment than Vivendi SA. However, Petroleo Brasileiro is 1.54 times more volatile than Vivendi SA. It trades about 0.01 of its potential returns per unit of risk. Vivendi SA is currently generating about -0.02 per unit of risk. If you would invest 1,387 in Petroleo Brasileiro Petrobras on September 14, 2024 and sell it today you would lose (26.00) from holding Petroleo Brasileiro Petrobras or give up 1.87% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 99.6% |
| Values | Daily Returns |
Petroleo Brasileiro Petrobras vs. Vivendi SA
Performance |
| Timeline |
| Petroleo Brasileiro |
| Vivendi SA |
Petroleo Brasileiro and Vivendi SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Petroleo Brasileiro and Vivendi SA
The main advantage of trading using opposite Petroleo Brasileiro and Vivendi SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Petroleo Brasileiro position performs unexpectedly, Vivendi SA 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 Vivendi SA will offset losses from the drop in Vivendi SA's long position.| Petroleo Brasileiro vs. Ecopetrol SA ADR | Petroleo Brasileiro vs. Equinor ASA ADR | Petroleo Brasileiro vs. Eni SpA ADR | Petroleo Brasileiro vs. Cenovus Energy |
| Vivendi SA vs. Lowland Investment Co | Vivendi SA vs. Southwest Airlines Co | Vivendi SA vs. Taylor Maritime Investments | Vivendi SA vs. Schroders Investment Trusts |
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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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