Correlation Between Petroleo Brasileiro and NEO PERFORMMAT
Can any of the company-specific risk be diversified away by investing in both Petroleo Brasileiro and NEO PERFORMMAT 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 NEO PERFORMMAT 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 NEO PERFORMMAT, you can compare the effects of market volatilities on Petroleo Brasileiro and NEO PERFORMMAT 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 NEO PERFORMMAT. Check out your portfolio center. Please also check ongoing floating volatility patterns of Petroleo Brasileiro and NEO PERFORMMAT.
Diversification Opportunities for Petroleo Brasileiro and NEO PERFORMMAT
-0.06 | Correlation Coefficient |
Good diversification
The 3 months correlation between Petroleo and NEO is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding Petroleo Brasileiro Petrobras and NEO PERFORMMAT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NEO PERFORMMAT 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 NEO PERFORMMAT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NEO PERFORMMAT has no effect on the direction of Petroleo Brasileiro i.e., Petroleo Brasileiro and NEO PERFORMMAT go up and down completely randomly.
Pair Corralation between Petroleo Brasileiro and NEO PERFORMMAT
Considering the 90-day investment horizon Petroleo Brasileiro Petrobras is expected to under-perform the NEO PERFORMMAT. But the stock apears to be less risky and, when comparing its historical volatility, Petroleo Brasileiro Petrobras is 1.54 times less risky than NEO PERFORMMAT. The stock trades about -0.02 of its potential returns per unit of risk. The NEO PERFORMMAT is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 511.00 in NEO PERFORMMAT on September 21, 2024 and sell it today you would earn a total of 10.00 from holding NEO PERFORMMAT or generate 1.96% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 98.15% |
| Values | Daily Returns |
Petroleo Brasileiro Petrobras vs. NEO PERFORMMAT
Performance |
| Timeline |
| Petroleo Brasileiro |
| NEO PERFORMMAT |
Petroleo Brasileiro and NEO PERFORMMAT Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Petroleo Brasileiro and NEO PERFORMMAT
The main advantage of trading using opposite Petroleo Brasileiro and NEO PERFORMMAT positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Petroleo Brasileiro position performs unexpectedly, NEO PERFORMMAT 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 NEO PERFORMMAT will offset losses from the drop in NEO PERFORMMAT'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 |
| NEO PERFORMMAT vs. Albemarle | NEO PERFORMMAT vs. Superior Plus Corp | NEO PERFORMMAT vs. SIVERS SEMICONDUCTORS AB | NEO PERFORMMAT vs. Norsk Hydro ASA |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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