Correlation Between Petroleo Brasileiro and Merck
Can any of the company-specific risk be diversified away by investing in both Petroleo Brasileiro and Merck 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 Merck 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 Merck Company, you can compare the effects of market volatilities on Petroleo Brasileiro and Merck 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 Merck. Check out your portfolio center. Please also check ongoing floating volatility patterns of Petroleo Brasileiro and Merck.
Diversification Opportunities for Petroleo Brasileiro and Merck
-0.25 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Petroleo and Merck is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding Petroleo Brasileiro Petrobras and Merck Company in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Merck Company 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 Merck. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Merck Company has no effect on the direction of Petroleo Brasileiro i.e., Petroleo Brasileiro and Merck go up and down completely randomly.
Pair Corralation between Petroleo Brasileiro and Merck
Considering the 90-day investment horizon Petroleo Brasileiro Petrobras is expected to generate 0.88 times more return on investment than Merck. However, Petroleo Brasileiro Petrobras is 1.14 times less risky than Merck. It trades about 0.46 of its potential returns per unit of risk. Merck Company is currently generating about 0.12 per unit of risk. If you would invest 1,247 in Petroleo Brasileiro Petrobras on October 22, 2024 and sell it today you would earn a total of 125.00 from holding Petroleo Brasileiro Petrobras or generate 10.02% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 84.21% |
| Values | Daily Returns |
Petroleo Brasileiro Petrobras vs. Merck Company
Performance |
| Timeline |
| Petroleo Brasileiro |
| Merck Company |
Petroleo Brasileiro and Merck Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Petroleo Brasileiro and Merck
The main advantage of trading using opposite Petroleo Brasileiro and Merck positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Petroleo Brasileiro position performs unexpectedly, Merck 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 Merck will offset losses from the drop in Merck'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 |
| Merck vs. GungHo Online Entertainment | Merck vs. Monster Beverage Corp | Merck vs. SALESFORCE INC CDR | Merck vs. MUTUIONLINE |
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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
Other Complementary Tools
| Economic Indicators Top statistical indicators that provide insights into how an economy is performing | |
| Stock Tickers Use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites | |
| Equity Forecasting Use basic forecasting models to generate price predictions and determine price momentum | |
| Efficient Frontier Plot and analyze your portfolio and positions against risk-return landscape of the market. | |
| Alpha Finder Use alpha and beta coefficients to find investment opportunities after accounting for the risk |