Correlation Between Petroleo Brasileiro and Northern Minerals
Can any of the company-specific risk be diversified away by investing in both Petroleo Brasileiro and Northern Minerals 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 Northern Minerals 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 Northern Minerals Exploration, you can compare the effects of market volatilities on Petroleo Brasileiro and Northern Minerals 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 Northern Minerals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Petroleo Brasileiro and Northern Minerals.
Diversification Opportunities for Petroleo Brasileiro and Northern Minerals
0.14 | Correlation Coefficient |
Average diversification
The 3 months correlation between Petroleo and Northern is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding Petroleo Brasileiro Petrobras and Northern Minerals Exploration in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Northern Minerals 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 Northern Minerals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Northern Minerals has no effect on the direction of Petroleo Brasileiro i.e., Petroleo Brasileiro and Northern Minerals go up and down completely randomly.
Pair Corralation between Petroleo Brasileiro and Northern Minerals
Considering the 90-day investment horizon Petroleo Brasileiro is expected to generate 13.39 times less return on investment than Northern Minerals. But when comparing it to its historical volatility, Petroleo Brasileiro Petrobras is 9.81 times less risky than Northern Minerals. It trades about 0.07 of its potential returns per unit of risk. Northern Minerals Exploration is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 7.00 in Northern Minerals Exploration on August 24, 2024 and sell it today you would earn a total of 11.00 from holding Northern Minerals Exploration or generate 157.14% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Petroleo Brasileiro Petrobras vs. Northern Minerals Exploration
Performance |
| Timeline |
| Petroleo Brasileiro |
| Northern Minerals |
Petroleo Brasileiro and Northern Minerals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Petroleo Brasileiro and Northern Minerals
The main advantage of trading using opposite Petroleo Brasileiro and Northern Minerals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Petroleo Brasileiro position performs unexpectedly, Northern Minerals 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 Northern Minerals will offset losses from the drop in Northern Minerals' long position.| Petroleo Brasileiro vs. Eshallgo Class A | Petroleo Brasileiro vs. Amtech Systems | Petroleo Brasileiro vs. Gold Fields Ltd | Petroleo Brasileiro vs. Aegean Airlines SA |
| Northern Minerals vs. Petroleo Brasileiro Petrobras | Northern Minerals vs. Equinor ASA ADR | Northern Minerals vs. Eni SpA ADR | Northern Minerals vs. YPF Sociedad Anonima |
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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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