Correlation Between Petroleo Brasileiro and Headwater Exploration
Can any of the company-specific risk be diversified away by investing in both Petroleo Brasileiro and Headwater Exploration 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 Headwater Exploration 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 Headwater Exploration, you can compare the effects of market volatilities on Petroleo Brasileiro and Headwater Exploration 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 Headwater Exploration. Check out your portfolio center. Please also check ongoing floating volatility patterns of Petroleo Brasileiro and Headwater Exploration.
Diversification Opportunities for Petroleo Brasileiro and Headwater Exploration
0.14 | Correlation Coefficient |
Average diversification
The 3 months correlation between Petroleo and Headwater is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding Petroleo Brasileiro Petrobras and Headwater Exploration in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Headwater Exploration 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 Headwater Exploration. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Headwater Exploration has no effect on the direction of Petroleo Brasileiro i.e., Petroleo Brasileiro and Headwater Exploration go up and down completely randomly.
Pair Corralation between Petroleo Brasileiro and Headwater Exploration
Considering the 90-day investment horizon Petroleo Brasileiro Petrobras is expected to generate 0.89 times more return on investment than Headwater Exploration. However, Petroleo Brasileiro Petrobras is 1.13 times less risky than Headwater Exploration. It trades about 0.11 of its potential returns per unit of risk. Headwater Exploration is currently generating about 0.07 per unit of risk. If you would invest 1,379 in Petroleo Brasileiro Petrobras on August 29, 2024 and sell it today you would earn a total of 57.00 from holding Petroleo Brasileiro Petrobras or generate 4.13% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Petroleo Brasileiro Petrobras vs. Headwater Exploration
Performance |
| Timeline |
| Petroleo Brasileiro |
| Headwater Exploration |
Petroleo Brasileiro and Headwater Exploration Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Petroleo Brasileiro and Headwater Exploration
The main advantage of trading using opposite Petroleo Brasileiro and Headwater Exploration positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Petroleo Brasileiro position performs unexpectedly, Headwater Exploration 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 Headwater Exploration will offset losses from the drop in Headwater Exploration'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 |
| Headwater Exploration vs. Yamaha Motor Co | Headwater Exploration vs. Nitto Denko Corp | Headwater Exploration vs. Farmers Merchants Bancorp | Headwater Exploration vs. Furukawa Electric Co |
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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
Other Complementary Tools
| Portfolio Manager State of the art Portfolio Manager to monitor and improve performance of your invested capital | |
| Economic Indicators Top statistical indicators that provide insights into how an economy is performing | |
| Bond Analysis Evaluate and analyze corporate bonds as a potential investment for your portfolios. | |
| Stock Tickers Use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites | |
| Idea Analyzer Analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas |