Correlation Between Petroleo Brasileiro and InPlay Oil
Can any of the company-specific risk be diversified away by investing in both Petroleo Brasileiro and InPlay Oil 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 InPlay Oil 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 InPlay Oil Corp, you can compare the effects of market volatilities on Petroleo Brasileiro and InPlay Oil 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 InPlay Oil. Check out your portfolio center. Please also check ongoing floating volatility patterns of Petroleo Brasileiro and InPlay Oil.
Diversification Opportunities for Petroleo Brasileiro and InPlay Oil
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Petroleo and InPlay is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Petroleo Brasileiro Petrobras and InPlay Oil Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on InPlay Oil 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 InPlay Oil. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of InPlay Oil Corp has no effect on the direction of Petroleo Brasileiro i.e., Petroleo Brasileiro and InPlay Oil go up and down completely randomly.
Pair Corralation between Petroleo Brasileiro and InPlay Oil
Considering the 90-day investment horizon Petroleo Brasileiro Petrobras is expected to generate 0.81 times more return on investment than InPlay Oil. However, Petroleo Brasileiro Petrobras is 1.24 times less risky than InPlay Oil. It trades about 0.07 of its potential returns per unit of risk. InPlay Oil Corp is currently generating about -0.19 per unit of risk. If you would invest 1,379 in Petroleo Brasileiro Petrobras on August 26, 2024 and sell it today you would earn a total of 36.00 from holding Petroleo Brasileiro Petrobras or generate 2.61% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Petroleo Brasileiro Petrobras vs. InPlay Oil Corp
Performance |
| Timeline |
| Petroleo Brasileiro |
| InPlay Oil Corp |
Petroleo Brasileiro and InPlay Oil Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Petroleo Brasileiro and InPlay Oil
The main advantage of trading using opposite Petroleo Brasileiro and InPlay Oil positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Petroleo Brasileiro position performs unexpectedly, InPlay Oil 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 InPlay Oil will offset losses from the drop in InPlay Oil's long position.| Petroleo Brasileiro vs. Shell PLC ADR | Petroleo Brasileiro vs. Suncor Energy | Petroleo Brasileiro vs. Cenovus Energy | Petroleo Brasileiro vs. Petrleo Brasileiro SA |
| InPlay Oil vs. Petroleo Brasileiro Petrobras | InPlay Oil vs. Equinor ASA ADR | InPlay Oil vs. Eni SpA ADR | InPlay Oil vs. YPF Sociedad Anonima |
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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.
Other Complementary Tools
| Share Portfolio Track or share privately all of your investments from the convenience of any device | |
| Efficient Frontier Plot and analyze your portfolio and positions against risk-return landscape of the market. | |
| Pair Correlation Compare performance and examine fundamental relationship between any two equity instruments | |
| CEOs Directory Screen CEOs from public companies around the world | |
| Portfolio File Import Quickly import all of your third-party portfolios from your local drive in csv format |