Correlation Between Petroleo Brasileiro and Makara Mining
Can any of the company-specific risk be diversified away by investing in both Petroleo Brasileiro and Makara 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 Makara 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 Makara Mining Corp, you can compare the effects of market volatilities on Petroleo Brasileiro and Makara 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 Makara Mining. Check out your portfolio center. Please also check ongoing floating volatility patterns of Petroleo Brasileiro and Makara Mining.
Diversification Opportunities for Petroleo Brasileiro and Makara Mining
-0.41 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Petroleo and Makara is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding Petroleo Brasileiro Petrobras and Makara Mining Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Makara 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 Makara Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Makara Mining Corp has no effect on the direction of Petroleo Brasileiro i.e., Petroleo Brasileiro and Makara Mining go up and down completely randomly.
Pair Corralation between Petroleo Brasileiro and Makara Mining
Considering the 90-day investment horizon Petroleo Brasileiro is expected to generate 13.38 times less return on investment than Makara Mining. But when comparing it to its historical volatility, Petroleo Brasileiro Petrobras is 12.61 times less risky than Makara Mining. It trades about 0.17 of its potential returns per unit of risk. Makara Mining Corp is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest 6.00 in Makara Mining Corp on September 13, 2024 and sell it today you would earn a total of 2.80 from holding Makara Mining Corp or generate 46.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Petroleo Brasileiro Petrobras vs. Makara Mining Corp
Performance |
| Timeline |
| Petroleo Brasileiro |
| Makara Mining Corp |
Petroleo Brasileiro and Makara Mining Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Petroleo Brasileiro and Makara Mining
The main advantage of trading using opposite Petroleo Brasileiro and Makara Mining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Petroleo Brasileiro position performs unexpectedly, Makara 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 Makara Mining will offset losses from the drop in Makara Mining's long position.| Petroleo Brasileiro vs. Aquagold International | Petroleo Brasileiro vs. Thrivent High Yield | Petroleo Brasileiro vs. Morningstar Unconstrained Allocation | Petroleo Brasileiro vs. Via Renewables |
| Makara Mining vs. Endurance Gold | Makara Mining vs. Sixty North Gold | Makara Mining vs. St James Gold | Makara Mining vs. Liberty Gold 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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