Correlation Between Petroleo Brasileiro and Minor International
Can any of the company-specific risk be diversified away by investing in both Petroleo Brasileiro and Minor International 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 Minor International 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 Minor International PCL, you can compare the effects of market volatilities on Petroleo Brasileiro and Minor International 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 Minor International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Petroleo Brasileiro and Minor International.
Diversification Opportunities for Petroleo Brasileiro and Minor International
-0.14 | Correlation Coefficient |
Good diversification
The 3 months correlation between Petroleo and Minor is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding Petroleo Brasileiro Petrobras and Minor International PCL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Minor International PCL 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 Minor International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Minor International PCL has no effect on the direction of Petroleo Brasileiro i.e., Petroleo Brasileiro and Minor International go up and down completely randomly.
Pair Corralation between Petroleo Brasileiro and Minor International
Considering the 90-day investment horizon Petroleo Brasileiro Petrobras is expected to generate 1.17 times more return on investment than Minor International. However, Petroleo Brasileiro is 1.17 times more volatile than Minor International PCL. It trades about 0.01 of its potential returns per unit of risk. Minor International PCL is currently generating about -0.01 per unit of risk. If you would invest 1,379 in Petroleo Brasileiro Petrobras on September 14, 2024 and sell it today you would lose (18.00) from holding Petroleo Brasileiro Petrobras or give up 1.31% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 58.36% |
| Values | Daily Returns |
Petroleo Brasileiro Petrobras vs. Minor International PCL
Performance |
| Timeline |
| Petroleo Brasileiro |
| Minor International PCL |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Petroleo Brasileiro and Minor International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Petroleo Brasileiro and Minor International
The main advantage of trading using opposite Petroleo Brasileiro and Minor International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Petroleo Brasileiro position performs unexpectedly, Minor International 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 Minor International will offset losses from the drop in Minor International'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 |
| Minor International vs. Alaska Air Group | Minor International vs. American Airlines Group | Minor International vs. Southwest Airlines | Minor International vs. Delta Air Lines |
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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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