Correlation Between Petroleo Brasileiro and Emetals
Can any of the company-specific risk be diversified away by investing in both Petroleo Brasileiro and Emetals 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 Emetals 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 Emetals, you can compare the effects of market volatilities on Petroleo Brasileiro and Emetals 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 Emetals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Petroleo Brasileiro and Emetals.
Diversification Opportunities for Petroleo Brasileiro and Emetals
-0.33 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Petroleo and Emetals is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding Petroleo Brasileiro Petrobras and Emetals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Emetals 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 Emetals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Emetals has no effect on the direction of Petroleo Brasileiro i.e., Petroleo Brasileiro and Emetals go up and down completely randomly.
Pair Corralation between Petroleo Brasileiro and Emetals
Considering the 90-day investment horizon Petroleo Brasileiro Petrobras is expected to generate 0.34 times more return on investment than Emetals. However, Petroleo Brasileiro Petrobras is 2.94 times less risky than Emetals. It trades about 0.08 of its potential returns per unit of risk. Emetals is currently generating about 0.01 per unit of risk. If you would invest 642.00 in Petroleo Brasileiro Petrobras on September 22, 2024 and sell it today you would earn a total of 662.00 from holding Petroleo Brasileiro Petrobras or generate 103.12% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.56% |
| Values | Daily Returns |
Petroleo Brasileiro Petrobras vs. Emetals
Performance |
| Timeline |
| Petroleo Brasileiro |
| Emetals |
Petroleo Brasileiro and Emetals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Petroleo Brasileiro and Emetals
The main advantage of trading using opposite Petroleo Brasileiro and Emetals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Petroleo Brasileiro position performs unexpectedly, Emetals 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 Emetals will offset losses from the drop in Emetals' long position.| Petroleo Brasileiro vs. Aquagold International | Petroleo Brasileiro vs. Thrivent High Yield | Petroleo Brasileiro vs. Morningstar Unconstrained Allocation | Petroleo Brasileiro vs. Via Renewables |
| Emetals vs. Northern Star Resources | Emetals vs. Evolution Mining | Emetals vs. Bluescope Steel | Emetals vs. Sandfire Resources NL |
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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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