Correlation Between Petroleo Brasileiro and Gear Energy
Can any of the company-specific risk be diversified away by investing in both Petroleo Brasileiro and Gear 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 Gear 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 Gear Energy, you can compare the effects of market volatilities on Petroleo Brasileiro and Gear 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 Gear Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Petroleo Brasileiro and Gear Energy.
Diversification Opportunities for Petroleo Brasileiro and Gear Energy
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Petroleo and Gear is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Petroleo Brasileiro Petrobras and Gear Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gear 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 Gear Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gear Energy has no effect on the direction of Petroleo Brasileiro i.e., Petroleo Brasileiro and Gear Energy go up and down completely randomly.
Pair Corralation between Petroleo Brasileiro and Gear Energy
Considering the 90-day investment horizon Petroleo Brasileiro Petrobras is expected to generate 0.81 times more return on investment than Gear Energy. However, Petroleo Brasileiro Petrobras is 1.23 times less risky than Gear Energy. It trades about 0.18 of its potential returns per unit of risk. Gear Energy is currently generating about 0.07 per unit of risk. If you would invest 1,345 in Petroleo Brasileiro Petrobras on September 1, 2024 and sell it today you would earn a total of 83.00 from holding Petroleo Brasileiro Petrobras or generate 6.17% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Petroleo Brasileiro Petrobras vs. Gear Energy
Performance |
| Timeline |
| Petroleo Brasileiro |
| Gear Energy |
Petroleo Brasileiro and Gear Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Petroleo Brasileiro and Gear Energy
The main advantage of trading using opposite Petroleo Brasileiro and Gear Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Petroleo Brasileiro position performs unexpectedly, Gear 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 Gear Energy will offset losses from the drop in Gear Energy's long position.| Petroleo Brasileiro vs. Shell PLC ADR | Petroleo Brasileiro vs. BP PLC ADR | Petroleo Brasileiro vs. Equinor ASA ADR | Petroleo Brasileiro vs. Petrleo Brasileiro SA |
| Gear Energy vs. Tamarack Valley Energy | Gear Energy vs. MEG Energy Corp | Gear Energy vs. Cardinal Energy | Gear Energy vs. Whitecap Resources |
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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.
Other Complementary Tools
| Correlation Analysis Reduce portfolio risk simply by holding instruments which are not perfectly correlated | |
| Insider Screener Find insiders across different sectors to evaluate their impact on performance | |
| Pair Correlation Compare performance and examine fundamental relationship between any two equity instruments | |
| Sync Your Broker Sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors. | |
| Funds Screener Find actively-traded funds from around the world traded on over 30 global exchanges |