Correlation Between Petroleo Brasileiro and Engie Energia
Can any of the company-specific risk be diversified away by investing in both Petroleo Brasileiro and Engie Energia 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 Engie Energia 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 Engie Energia Chile, you can compare the effects of market volatilities on Petroleo Brasileiro and Engie Energia 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 Engie Energia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Petroleo Brasileiro and Engie Energia.
Diversification Opportunities for Petroleo Brasileiro and Engie Energia
-0.54 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Petroleo and Engie is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding Petroleo Brasileiro Petrobras and Engie Energia Chile in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Engie Energia Chile 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 Engie Energia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Engie Energia Chile has no effect on the direction of Petroleo Brasileiro i.e., Petroleo Brasileiro and Engie Energia go up and down completely randomly.
Pair Corralation between Petroleo Brasileiro and Engie Energia
Considering the 90-day investment horizon Petroleo Brasileiro Petrobras is expected to generate 1.43 times more return on investment than Engie Energia. However, Petroleo Brasileiro is 1.43 times more volatile than Engie Energia Chile. It trades about 0.08 of its potential returns per unit of risk. Engie Energia Chile is currently generating about 0.09 per unit of risk. If you would invest 642.00 in Petroleo Brasileiro Petrobras on September 24, 2024 and sell it today you would earn a total of 642.50 from holding Petroleo Brasileiro Petrobras or generate 100.08% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 98.59% |
| Values | Daily Returns |
Petroleo Brasileiro Petrobras vs. Engie Energia Chile
Performance |
| Timeline |
| Petroleo Brasileiro |
| Engie Energia Chile |
Petroleo Brasileiro and Engie Energia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Petroleo Brasileiro and Engie Energia
The main advantage of trading using opposite Petroleo Brasileiro and Engie Energia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Petroleo Brasileiro position performs unexpectedly, Engie Energia 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 Engie Energia will offset losses from the drop in Engie Energia'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 |
| Engie Energia vs. Colbun | Engie Energia vs. Enel Chile SA | Engie Energia vs. CAP SA | Engie Energia vs. Enel Amricas SA |
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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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