Correlation Between Petroleo Brasileiro and Eskay Mining
Can any of the company-specific risk be diversified away by investing in both Petroleo Brasileiro and Eskay Mining 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 Eskay Mining 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 Eskay Mining Corp, you can compare the effects of market volatilities on Petroleo Brasileiro and Eskay Mining 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 Eskay Mining. Check out your portfolio center. Please also check ongoing floating volatility patterns of Petroleo Brasileiro and Eskay Mining.
Diversification Opportunities for Petroleo Brasileiro and Eskay Mining
0.34 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Petroleo and Eskay is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Petroleo Brasileiro Petrobras and Eskay Mining Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eskay Mining 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 Eskay Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eskay Mining Corp has no effect on the direction of Petroleo Brasileiro i.e., Petroleo Brasileiro and Eskay Mining go up and down completely randomly.
Pair Corralation between Petroleo Brasileiro and Eskay Mining
Considering the 90-day investment horizon Petroleo Brasileiro Petrobras is expected to under-perform the Eskay Mining. But the stock apears to be less risky and, when comparing its historical volatility, Petroleo Brasileiro Petrobras is 5.0 times less risky than Eskay Mining. The stock trades about -0.06 of its potential returns per unit of risk. The Eskay Mining Corp is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest 9.10 in Eskay Mining Corp on September 19, 2024 and sell it today you would earn a total of 2.90 from holding Eskay Mining Corp or generate 31.87% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Petroleo Brasileiro Petrobras vs. Eskay Mining Corp
Performance |
| Timeline |
| Petroleo Brasileiro |
| Eskay Mining Corp |
Petroleo Brasileiro and Eskay Mining Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Petroleo Brasileiro and Eskay Mining
The main advantage of trading using opposite Petroleo Brasileiro and Eskay Mining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Petroleo Brasileiro position performs unexpectedly, Eskay Mining 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 Eskay Mining will offset losses from the drop in Eskay Mining'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 |
| Eskay Mining vs. American Lithium Corp | Eskay Mining vs. ADRIATIC METALS LS 013355 | Eskay Mining vs. Superior Plus Corp | Eskay Mining vs. SIVERS SEMICONDUCTORS AB |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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