Correlation Between Petroleo Brasileiro and IShares Trust
Can any of the company-specific risk be diversified away by investing in both Petroleo Brasileiro and IShares Trust 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 IShares Trust 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 iShares Trust, you can compare the effects of market volatilities on Petroleo Brasileiro and IShares Trust 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 IShares Trust. Check out your portfolio center. Please also check ongoing floating volatility patterns of Petroleo Brasileiro and IShares Trust.
Diversification Opportunities for Petroleo Brasileiro and IShares Trust
0.15 | Correlation Coefficient |
Average diversification
The 3 months correlation between Petroleo and IShares is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Petroleo Brasileiro Petrobras and iShares Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Trust 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 IShares Trust. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Trust has no effect on the direction of Petroleo Brasileiro i.e., Petroleo Brasileiro and IShares Trust go up and down completely randomly.
Pair Corralation between Petroleo Brasileiro and IShares Trust
Considering the 90-day investment horizon Petroleo Brasileiro is expected to generate 5.5 times less return on investment than IShares Trust. In addition to that, Petroleo Brasileiro is 3.59 times more volatile than iShares Trust. It trades about 0.01 of its total potential returns per unit of risk. iShares Trust is currently generating about 0.11 per unit of volatility. If you would invest 2,713 in iShares Trust on September 14, 2024 and sell it today you would earn a total of 407.00 from holding iShares Trust or generate 15.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 99.6% |
| Values | Daily Returns |
Petroleo Brasileiro Petrobras vs. iShares Trust
Performance |
| Timeline |
| Petroleo Brasileiro |
| iShares Trust |
Petroleo Brasileiro and IShares Trust Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Petroleo Brasileiro and IShares Trust
The main advantage of trading using opposite Petroleo Brasileiro and IShares Trust positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Petroleo Brasileiro position performs unexpectedly, IShares Trust 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 IShares Trust will offset losses from the drop in IShares Trust'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 |
| IShares Trust vs. First Trust Multi Asset | IShares Trust vs. Collaborative Investment Series | IShares Trust vs. EA Series Trust | IShares Trust vs. Aptus Defined Risk |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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