Correlation Between Petroleo Brasileiro and LIBERTY DEFENSE
Can any of the company-specific risk be diversified away by investing in both Petroleo Brasileiro and LIBERTY DEFENSE 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 LIBERTY DEFENSE 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 LIBERTY DEFENSE H, you can compare the effects of market volatilities on Petroleo Brasileiro and LIBERTY DEFENSE 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 LIBERTY DEFENSE. Check out your portfolio center. Please also check ongoing floating volatility patterns of Petroleo Brasileiro and LIBERTY DEFENSE.
Diversification Opportunities for Petroleo Brasileiro and LIBERTY DEFENSE
-0.23 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Petroleo and LIBERTY is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding Petroleo Brasileiro Petrobras and LIBERTY DEFENSE H in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LIBERTY DEFENSE H 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 LIBERTY DEFENSE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LIBERTY DEFENSE H has no effect on the direction of Petroleo Brasileiro i.e., Petroleo Brasileiro and LIBERTY DEFENSE go up and down completely randomly.
Pair Corralation between Petroleo Brasileiro and LIBERTY DEFENSE
Considering the 90-day investment horizon Petroleo Brasileiro Petrobras is expected to under-perform the LIBERTY DEFENSE. But the stock apears to be less risky and, when comparing its historical volatility, Petroleo Brasileiro Petrobras is 6.95 times less risky than LIBERTY DEFENSE. The stock trades about -0.14 of its potential returns per unit of risk. The LIBERTY DEFENSE H is currently generating about 0.29 of returns per unit of risk over similar time horizon. If you would invest 28.00 in LIBERTY DEFENSE H on September 28, 2024 and sell it today you would earn a total of 24.00 from holding LIBERTY DEFENSE H or generate 85.71% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Petroleo Brasileiro Petrobras vs. LIBERTY DEFENSE H
Performance |
| Timeline |
| Petroleo Brasileiro |
| LIBERTY DEFENSE H |
Petroleo Brasileiro and LIBERTY DEFENSE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Petroleo Brasileiro and LIBERTY DEFENSE
The main advantage of trading using opposite Petroleo Brasileiro and LIBERTY DEFENSE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Petroleo Brasileiro position performs unexpectedly, LIBERTY DEFENSE 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 LIBERTY DEFENSE will offset losses from the drop in LIBERTY DEFENSE'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 |
| LIBERTY DEFENSE vs. ABB PAR AB | LIBERTY DEFENSE vs. ASSA ABLOY AB | LIBERTY DEFENSE vs. SECOM LTD | LIBERTY DEFENSE vs. Halma plc |
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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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