Correlation Between Petroleo Brasileiro and Enel Chile
Can any of the company-specific risk be diversified away by investing in both Petroleo Brasileiro and Enel Chile 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 Enel Chile 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 Enel Chile SA, you can compare the effects of market volatilities on Petroleo Brasileiro and Enel Chile 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 Enel Chile. Check out your portfolio center. Please also check ongoing floating volatility patterns of Petroleo Brasileiro and Enel Chile.
Diversification Opportunities for Petroleo Brasileiro and Enel Chile
-0.45 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Petroleo and Enel is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding Petroleo Brasileiro Petrobras and Enel Chile SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Enel Chile 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 Enel Chile. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Enel Chile SA has no effect on the direction of Petroleo Brasileiro i.e., Petroleo Brasileiro and Enel Chile go up and down completely randomly.
Pair Corralation between Petroleo Brasileiro and Enel Chile
Considering the 90-day investment horizon Petroleo Brasileiro is expected to generate 1.96 times less return on investment than Enel Chile. In addition to that, Petroleo Brasileiro is 1.25 times more volatile than Enel Chile SA. It trades about 0.1 of its total potential returns per unit of risk. Enel Chile SA is currently generating about 0.25 per unit of volatility. If you would invest 250.00 in Enel Chile SA on September 13, 2024 and sell it today you would earn a total of 22.00 from holding Enel Chile SA or generate 8.8% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Petroleo Brasileiro Petrobras vs. Enel Chile SA
Performance |
| Timeline |
| Petroleo Brasileiro |
| Enel Chile SA |
Petroleo Brasileiro and Enel Chile Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Petroleo Brasileiro and Enel Chile
The main advantage of trading using opposite Petroleo Brasileiro and Enel Chile positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Petroleo Brasileiro position performs unexpectedly, Enel Chile 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 Enel Chile will offset losses from the drop in Enel Chile'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 |
| Enel Chile vs. Air Transport Services | Enel Chile vs. THORNEY TECHS LTD | Enel Chile vs. GLG LIFE TECH | Enel Chile vs. TEXAS ROADHOUSE |
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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