Correlation Between Petroleo Brasileiro and Blue Water
Can any of the company-specific risk be diversified away by investing in both Petroleo Brasileiro and Blue Water 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 Blue Water 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 Blue Water Petroleum, you can compare the effects of market volatilities on Petroleo Brasileiro and Blue Water 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 Blue Water. Check out your portfolio center. Please also check ongoing floating volatility patterns of Petroleo Brasileiro and Blue Water.
Diversification Opportunities for Petroleo Brasileiro and Blue Water
-0.62 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Petroleo and Blue is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding Petroleo Brasileiro Petrobras and Blue Water Petroleum in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Blue Water Petroleum 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 Blue Water. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Blue Water Petroleum has no effect on the direction of Petroleo Brasileiro i.e., Petroleo Brasileiro and Blue Water go up and down completely randomly.
Pair Corralation between Petroleo Brasileiro and Blue Water
Considering the 90-day investment horizon Petroleo Brasileiro Petrobras is expected to generate 0.15 times more return on investment than Blue Water. However, Petroleo Brasileiro Petrobras is 6.5 times less risky than Blue Water. It trades about 0.0 of its potential returns per unit of risk. Blue Water Petroleum is currently generating about -0.04 per unit of risk. If you would invest 1,549 in Petroleo Brasileiro Petrobras on August 29, 2024 and sell it today you would lose (82.00) from holding Petroleo Brasileiro Petrobras or give up 5.29% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Petroleo Brasileiro Petrobras vs. Blue Water Petroleum
Performance |
| Timeline |
| Petroleo Brasileiro |
| Blue Water Petroleum |
Petroleo Brasileiro and Blue Water Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Petroleo Brasileiro and Blue Water
The main advantage of trading using opposite Petroleo Brasileiro and Blue Water positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Petroleo Brasileiro position performs unexpectedly, Blue Water 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 Blue Water will offset losses from the drop in Blue Water'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 |
| Blue Water vs. BluMetric Environmental | Blue Water vs. BQE Water | Blue Water vs. Houston Natural Resources | Blue Water vs. JPX Global |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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