Correlation Between Petroleo Brasileiro and Hampton Financial
Can any of the company-specific risk be diversified away by investing in both Petroleo Brasileiro and Hampton Financial 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 Hampton Financial 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 Hampton Financial Corp, you can compare the effects of market volatilities on Petroleo Brasileiro and Hampton Financial 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 Hampton Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Petroleo Brasileiro and Hampton Financial.
Diversification Opportunities for Petroleo Brasileiro and Hampton Financial
0.04 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Petroleo and Hampton is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Petroleo Brasileiro Petrobras and Hampton Financial Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hampton Financial Corp 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 Hampton Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hampton Financial Corp has no effect on the direction of Petroleo Brasileiro i.e., Petroleo Brasileiro and Hampton Financial go up and down completely randomly.
Pair Corralation between Petroleo Brasileiro and Hampton Financial
Considering the 90-day investment horizon Petroleo Brasileiro Petrobras is expected to generate 0.75 times more return on investment than Hampton Financial. However, Petroleo Brasileiro Petrobras is 1.33 times less risky than Hampton Financial. It trades about 0.08 of its potential returns per unit of risk. Hampton Financial Corp is currently generating about 0.01 per unit of risk. If you would invest 651.00 in Petroleo Brasileiro Petrobras on December 4, 2024 and sell it today you would earn a total of 634.00 from holding Petroleo Brasileiro Petrobras or generate 97.39% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Petroleo Brasileiro Petrobras vs. Hampton Financial Corp
Performance |
| Timeline |
| Petroleo Brasileiro |
| Hampton Financial Corp |
Petroleo Brasileiro and Hampton Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Petroleo Brasileiro and Hampton Financial
The main advantage of trading using opposite Petroleo Brasileiro and Hampton Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Petroleo Brasileiro position performs unexpectedly, Hampton Financial 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 Hampton Financial will offset losses from the drop in Hampton Financial'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 |
| Hampton Financial vs. Adex Mining | Hampton Financial vs. Profound Medical Corp | Hampton Financial vs. XXIX Metal Corp | Hampton Financial vs. NeXGold Mining Corp |
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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