Correlation Between Petroleo Brasileiro and Companhia Energética
Can any of the company-specific risk be diversified away by investing in both Petroleo Brasileiro and Companhia Energética 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 Companhia Energética 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 Companhia Energtica de, you can compare the effects of market volatilities on Petroleo Brasileiro and Companhia Energética 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 Companhia Energética. Check out your portfolio center. Please also check ongoing floating volatility patterns of Petroleo Brasileiro and Companhia Energética.
Diversification Opportunities for Petroleo Brasileiro and Companhia Energética
0.01 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Petroleo and Companhia is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding Petroleo Brasileiro Petrobras and Companhia Energtica de in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Companhia Energética 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 Companhia Energética. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Companhia Energética has no effect on the direction of Petroleo Brasileiro i.e., Petroleo Brasileiro and Companhia Energética go up and down completely randomly.
Pair Corralation between Petroleo Brasileiro and Companhia Energética
Considering the 90-day investment horizon Petroleo Brasileiro is expected to generate 3.99 times less return on investment than Companhia Energética. But when comparing it to its historical volatility, Petroleo Brasileiro Petrobras is 1.64 times less risky than Companhia Energética. It trades about 0.03 of its potential returns per unit of risk. Companhia Energtica de is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 112.00 in Companhia Energtica de on December 4, 2024 and sell it today you would earn a total of 70.00 from holding Companhia Energtica de or generate 62.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 99.19% |
| Values | Daily Returns |
Petroleo Brasileiro Petrobras vs. Companhia Energtica de
Performance |
| Timeline |
| Petroleo Brasileiro |
| Companhia Energética |
Petroleo Brasileiro and Companhia Energética Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Petroleo Brasileiro and Companhia Energética
The main advantage of trading using opposite Petroleo Brasileiro and Companhia Energética positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Petroleo Brasileiro position performs unexpectedly, Companhia Energética 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 Companhia Energética will offset losses from the drop in Companhia Energética'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 |
| Companhia Energética vs. Apollo Investment Corp | Companhia Energética vs. AGNC Investment Corp | Companhia Energética vs. ECHO INVESTMENT ZY | Companhia Energética vs. FIREWEED METALS P |
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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
Other Complementary Tools
| Commodity Channel Use Commodity Channel Index to analyze current equity momentum | |
| Theme Ratings Determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Portfolio Holdings Check your current holdings and cash postion to detemine if your portfolio needs rebalancing | |
| Pattern Recognition Use different Pattern Recognition models to time the market across multiple global exchanges | |
| Portfolio Suggestion Get suggestions outside of your existing asset allocation including your own model portfolios |