Correlation Between Petroleo Brasileiro and Esprinet SpA
Can any of the company-specific risk be diversified away by investing in both Petroleo Brasileiro and Esprinet SpA 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 Esprinet SpA 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 Esprinet SpA, you can compare the effects of market volatilities on Petroleo Brasileiro and Esprinet SpA 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 Esprinet SpA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Petroleo Brasileiro and Esprinet SpA.
Diversification Opportunities for Petroleo Brasileiro and Esprinet SpA
0.09 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Petroleo and Esprinet is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding Petroleo Brasileiro Petrobras and Esprinet SpA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Esprinet SpA 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 Esprinet SpA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Esprinet SpA has no effect on the direction of Petroleo Brasileiro i.e., Petroleo Brasileiro and Esprinet SpA go up and down completely randomly.
Pair Corralation between Petroleo Brasileiro and Esprinet SpA
Considering the 90-day investment horizon Petroleo Brasileiro Petrobras is expected to under-perform the Esprinet SpA. But the stock apears to be less risky and, when comparing its historical volatility, Petroleo Brasileiro Petrobras is 1.25 times less risky than Esprinet SpA. The stock trades about -0.24 of its potential returns per unit of risk. The Esprinet SpA is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 405.00 in Esprinet SpA on September 26, 2024 and sell it today you would earn a total of 3.00 from holding Esprinet SpA or generate 0.74% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Petroleo Brasileiro Petrobras vs. Esprinet SpA
Performance |
| Timeline |
| Petroleo Brasileiro |
| Esprinet SpA |
Petroleo Brasileiro and Esprinet SpA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Petroleo Brasileiro and Esprinet SpA
The main advantage of trading using opposite Petroleo Brasileiro and Esprinet SpA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Petroleo Brasileiro position performs unexpectedly, Esprinet SpA 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 Esprinet SpA will offset losses from the drop in Esprinet SpA's long position.The idea behind Petroleo Brasileiro Petrobras and Esprinet SpA pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Esprinet SpA vs. Arrow Electronics | Esprinet SpA vs. DICKER DATA LTD | Esprinet SpA vs. KAGA EL LTD | Esprinet SpA vs. Wayside Technology Group |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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