Correlation Between Petroleo Brasileiro and SPDR Galaxy
Can any of the company-specific risk be diversified away by investing in both Petroleo Brasileiro and SPDR Galaxy 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 SPDR Galaxy 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 SPDR Galaxy Hedged, you can compare the effects of market volatilities on Petroleo Brasileiro and SPDR Galaxy 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 SPDR Galaxy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Petroleo Brasileiro and SPDR Galaxy.
Diversification Opportunities for Petroleo Brasileiro and SPDR Galaxy
-0.07 | Correlation Coefficient |
Good diversification
The 3 months correlation between Petroleo and SPDR is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding Petroleo Brasileiro Petrobras and SPDR Galaxy Hedged in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPDR Galaxy Hedged 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 SPDR Galaxy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SPDR Galaxy Hedged has no effect on the direction of Petroleo Brasileiro i.e., Petroleo Brasileiro and SPDR Galaxy go up and down completely randomly.
Pair Corralation between Petroleo Brasileiro and SPDR Galaxy
Considering the 90-day investment horizon Petroleo Brasileiro Petrobras is expected to generate 0.7 times more return on investment than SPDR Galaxy. However, Petroleo Brasileiro Petrobras is 1.43 times less risky than SPDR Galaxy. It trades about -0.2 of its potential returns per unit of risk. SPDR Galaxy Hedged is currently generating about -0.3 per unit of risk. If you would invest 1,413 in Petroleo Brasileiro Petrobras on December 6, 2024 and sell it today you would lose (117.00) from holding Petroleo Brasileiro Petrobras or give up 8.28% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Petroleo Brasileiro Petrobras vs. SPDR Galaxy Hedged
Performance |
| Timeline |
| Petroleo Brasileiro |
| SPDR Galaxy Hedged |
Petroleo Brasileiro and SPDR Galaxy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Petroleo Brasileiro and SPDR Galaxy
The main advantage of trading using opposite Petroleo Brasileiro and SPDR Galaxy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Petroleo Brasileiro position performs unexpectedly, SPDR Galaxy 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 SPDR Galaxy will offset losses from the drop in SPDR Galaxy'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 |
| SPDR Galaxy vs. Strategy Shares | SPDR Galaxy vs. Freedom Day Dividend | SPDR Galaxy vs. Franklin Templeton ETF | SPDR Galaxy vs. iShares MSCI China |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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