Correlation Between Petroleo Brasileiro and Cardinal Energy
Can any of the company-specific risk be diversified away by investing in both Petroleo Brasileiro and Cardinal Energy 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 Cardinal Energy 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 Cardinal Energy, you can compare the effects of market volatilities on Petroleo Brasileiro and Cardinal Energy 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 Cardinal Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Petroleo Brasileiro and Cardinal Energy.
Diversification Opportunities for Petroleo Brasileiro and Cardinal Energy
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Petroleo and Cardinal is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Petroleo Brasileiro Petrobras and Cardinal Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cardinal Energy 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 Cardinal Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cardinal Energy has no effect on the direction of Petroleo Brasileiro i.e., Petroleo Brasileiro and Cardinal Energy go up and down completely randomly.
Pair Corralation between Petroleo Brasileiro and Cardinal Energy
Considering the 90-day investment horizon Petroleo Brasileiro Petrobras is expected to generate 1.14 times more return on investment than Cardinal Energy. However, Petroleo Brasileiro is 1.14 times more volatile than Cardinal Energy. It trades about -0.04 of its potential returns per unit of risk. Cardinal Energy is currently generating about -0.09 per unit of risk. If you would invest 1,528 in Petroleo Brasileiro Petrobras on August 29, 2024 and sell it today you would lose (61.00) from holding Petroleo Brasileiro Petrobras or give up 3.99% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Petroleo Brasileiro Petrobras vs. Cardinal Energy
Performance |
| Timeline |
| Petroleo Brasileiro |
| Cardinal Energy |
Petroleo Brasileiro and Cardinal Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Petroleo Brasileiro and Cardinal Energy
The main advantage of trading using opposite Petroleo Brasileiro and Cardinal Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Petroleo Brasileiro position performs unexpectedly, Cardinal Energy 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 Cardinal Energy will offset losses from the drop in Cardinal Energy'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 |
| Cardinal Energy vs. Tamarack Valley Energy | Cardinal Energy vs. Pine Cliff Energy | Cardinal Energy vs. MEG Energy Corp | Cardinal Energy vs. Headwater Exploration |
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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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