Correlation Between Petroleo Brasileiro and CaixaBank
Can any of the company-specific risk be diversified away by investing in both Petroleo Brasileiro and CaixaBank 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 CaixaBank 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 CaixaBank SA, you can compare the effects of market volatilities on Petroleo Brasileiro and CaixaBank 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 CaixaBank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Petroleo Brasileiro and CaixaBank.
Diversification Opportunities for Petroleo Brasileiro and CaixaBank
-0.37 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Petroleo and CaixaBank is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Petroleo Brasileiro Petrobras and CaixaBank SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CaixaBank 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 CaixaBank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CaixaBank SA has no effect on the direction of Petroleo Brasileiro i.e., Petroleo Brasileiro and CaixaBank go up and down completely randomly.
Pair Corralation between Petroleo Brasileiro and CaixaBank
Considering the 90-day investment horizon Petroleo Brasileiro Petrobras is expected to generate 1.12 times more return on investment than CaixaBank. However, Petroleo Brasileiro is 1.12 times more volatile than CaixaBank SA. It trades about 0.07 of its potential returns per unit of risk. CaixaBank SA is currently generating about 0.06 per unit of risk. If you would invest 692.00 in Petroleo Brasileiro Petrobras on September 28, 2024 and sell it today you would earn a total of 569.00 from holding Petroleo Brasileiro Petrobras or generate 82.23% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 98.61% |
| Values | Daily Returns |
Petroleo Brasileiro Petrobras vs. CaixaBank SA
Performance |
| Timeline |
| Petroleo Brasileiro |
| CaixaBank SA |
Petroleo Brasileiro and CaixaBank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Petroleo Brasileiro and CaixaBank
The main advantage of trading using opposite Petroleo Brasileiro and CaixaBank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Petroleo Brasileiro position performs unexpectedly, CaixaBank 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 CaixaBank will offset losses from the drop in CaixaBank'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 |
| CaixaBank vs. BNP PARIBAS ADR | CaixaBank vs. Intesa Sanpaolo SpA | CaixaBank vs. Lloyds Banking Group | CaixaBank vs. Lloyds Banking Group |
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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.
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