Correlation Between Petroleo Brasileiro and Millbank Mining
Can any of the company-specific risk be diversified away by investing in both Petroleo Brasileiro and Millbank 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 Millbank 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 Millbank Mining Corp, you can compare the effects of market volatilities on Petroleo Brasileiro and Millbank 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 Millbank Mining. Check out your portfolio center. Please also check ongoing floating volatility patterns of Petroleo Brasileiro and Millbank Mining.
Diversification Opportunities for Petroleo Brasileiro and Millbank Mining
-0.58 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Petroleo and Millbank is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding Petroleo Brasileiro Petrobras and Millbank Mining Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Millbank 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 Millbank Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Millbank Mining Corp has no effect on the direction of Petroleo Brasileiro i.e., Petroleo Brasileiro and Millbank Mining go up and down completely randomly.
Pair Corralation between Petroleo Brasileiro and Millbank Mining
Considering the 90-day investment horizon Petroleo Brasileiro Petrobras is expected to generate 0.62 times more return on investment than Millbank Mining. However, Petroleo Brasileiro Petrobras is 1.62 times less risky than Millbank Mining. It trades about -0.06 of its potential returns per unit of risk. Millbank Mining Corp is currently generating about -0.07 per unit of risk. If you would invest 1,391 in Petroleo Brasileiro Petrobras on September 19, 2024 and sell it today you would lose (39.00) from holding Petroleo Brasileiro Petrobras or give up 2.8% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Petroleo Brasileiro Petrobras vs. Millbank Mining Corp
Performance |
| Timeline |
| Petroleo Brasileiro |
| Millbank Mining Corp |
Petroleo Brasileiro and Millbank Mining Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Petroleo Brasileiro and Millbank Mining
The main advantage of trading using opposite Petroleo Brasileiro and Millbank Mining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Petroleo Brasileiro position performs unexpectedly, Millbank 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 Millbank Mining will offset losses from the drop in Millbank 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 |
| Millbank Mining vs. Foraco International SA | Millbank Mining vs. Geodrill Limited | Millbank Mining vs. Bri Chem 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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