Correlation Between Petroleo Brasileiro and AUST AGRICULTURAL
Can any of the company-specific risk be diversified away by investing in both Petroleo Brasileiro and AUST AGRICULTURAL 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 AUST AGRICULTURAL 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 AUST AGRICULTURAL, you can compare the effects of market volatilities on Petroleo Brasileiro and AUST AGRICULTURAL 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 AUST AGRICULTURAL. Check out your portfolio center. Please also check ongoing floating volatility patterns of Petroleo Brasileiro and AUST AGRICULTURAL.
Diversification Opportunities for Petroleo Brasileiro and AUST AGRICULTURAL
0.38 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Petroleo and AUST is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Petroleo Brasileiro Petrobras and AUST AGRICULTURAL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AUST AGRICULTURAL 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 AUST AGRICULTURAL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AUST AGRICULTURAL has no effect on the direction of Petroleo Brasileiro i.e., Petroleo Brasileiro and AUST AGRICULTURAL go up and down completely randomly.
Pair Corralation between Petroleo Brasileiro and AUST AGRICULTURAL
Considering the 90-day investment horizon Petroleo Brasileiro Petrobras is expected to under-perform the AUST AGRICULTURAL. In addition to that, Petroleo Brasileiro is 2.07 times more volatile than AUST AGRICULTURAL. It trades about -0.06 of its total potential returns per unit of risk. AUST AGRICULTURAL is currently generating about -0.05 per unit of volatility. If you would invest 82.00 in AUST AGRICULTURAL on September 19, 2024 and sell it today you would lose (1.00) from holding AUST AGRICULTURAL or give up 1.22% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Petroleo Brasileiro Petrobras vs. AUST AGRICULTURAL
Performance |
| Timeline |
| Petroleo Brasileiro |
| AUST AGRICULTURAL |
Petroleo Brasileiro and AUST AGRICULTURAL Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Petroleo Brasileiro and AUST AGRICULTURAL
The main advantage of trading using opposite Petroleo Brasileiro and AUST AGRICULTURAL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Petroleo Brasileiro position performs unexpectedly, AUST AGRICULTURAL 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 AUST AGRICULTURAL will offset losses from the drop in AUST AGRICULTURAL'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 |
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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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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