Correlation Between Petroleo Brasileiro and High Yield
Can any of the company-specific risk be diversified away by investing in both Petroleo Brasileiro and High Yield 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 High Yield 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 High Yield Portfolio, you can compare the effects of market volatilities on Petroleo Brasileiro and High Yield 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 High Yield. Check out your portfolio center. Please also check ongoing floating volatility patterns of Petroleo Brasileiro and High Yield.
Diversification Opportunities for Petroleo Brasileiro and High Yield
-0.17 | Correlation Coefficient |
Good diversification
The 3 months correlation between Petroleo and High is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding Petroleo Brasileiro Petrobras and High Yield Portfolio in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on High Yield Portfolio 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 High Yield. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of High Yield Portfolio has no effect on the direction of Petroleo Brasileiro i.e., Petroleo Brasileiro and High Yield go up and down completely randomly.
Pair Corralation between Petroleo Brasileiro and High Yield
Considering the 90-day investment horizon Petroleo Brasileiro Petrobras is expected to generate 8.96 times more return on investment than High Yield. However, Petroleo Brasileiro is 8.96 times more volatile than High Yield Portfolio. It trades about 0.07 of its potential returns per unit of risk. High Yield Portfolio is currently generating about 0.16 per unit of risk. If you would invest 762.00 in Petroleo Brasileiro Petrobras on September 14, 2024 and sell it today you would earn a total of 599.00 from holding Petroleo Brasileiro Petrobras or generate 78.61% 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. High Yield Portfolio
Performance |
| Timeline |
| Petroleo Brasileiro |
| High Yield Portfolio |
Petroleo Brasileiro and High Yield Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Petroleo Brasileiro and High Yield
The main advantage of trading using opposite Petroleo Brasileiro and High Yield positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Petroleo Brasileiro position performs unexpectedly, High Yield 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 High Yield will offset losses from the drop in High Yield'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 |
| High Yield vs. Guidemark Large Cap | High Yield vs. Fm Investments Large | High Yield vs. Jhancock Disciplined Value | High Yield vs. Morningstar Unconstrained Allocation |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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