Correlation Between Petroleo Brasileiro and Baillie Gifford
Can any of the company-specific risk be diversified away by investing in both Petroleo Brasileiro and Baillie Gifford 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 Baillie Gifford 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 Baillie Gifford European, you can compare the effects of market volatilities on Petroleo Brasileiro and Baillie Gifford 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 Baillie Gifford. Check out your portfolio center. Please also check ongoing floating volatility patterns of Petroleo Brasileiro and Baillie Gifford.
Diversification Opportunities for Petroleo Brasileiro and Baillie Gifford
0.45 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Petroleo and Baillie is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Petroleo Brasileiro Petrobras and Baillie Gifford European in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Baillie Gifford European 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 Baillie Gifford. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Baillie Gifford European has no effect on the direction of Petroleo Brasileiro i.e., Petroleo Brasileiro and Baillie Gifford go up and down completely randomly.
Pair Corralation between Petroleo Brasileiro and Baillie Gifford
Considering the 90-day investment horizon Petroleo Brasileiro Petrobras is expected to under-perform the Baillie Gifford. In addition to that, Petroleo Brasileiro is 3.22 times more volatile than Baillie Gifford European. It trades about -0.16 of its total potential returns per unit of risk. Baillie Gifford European is currently generating about 0.12 per unit of volatility. If you would invest 8,460 in Baillie Gifford European on September 19, 2024 and sell it today you would earn a total of 160.00 from holding Baillie Gifford European or generate 1.89% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Petroleo Brasileiro Petrobras vs. Baillie Gifford European
Performance |
| Timeline |
| Petroleo Brasileiro |
| Baillie Gifford European |
Petroleo Brasileiro and Baillie Gifford Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Petroleo Brasileiro and Baillie Gifford
The main advantage of trading using opposite Petroleo Brasileiro and Baillie Gifford positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Petroleo Brasileiro position performs unexpectedly, Baillie Gifford 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 Baillie Gifford will offset losses from the drop in Baillie Gifford'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 |
| Baillie Gifford vs. British American Tobacco | Baillie Gifford vs. Gaztransport et Technigaz | Baillie Gifford vs. Pets at Home | Baillie Gifford vs. Fulcrum Metals PLC |
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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