Correlation Between Petroleo Brasileiro and FIRST TRUST
Can any of the company-specific risk be diversified away by investing in both Petroleo Brasileiro and FIRST TRUST 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 FIRST TRUST 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 FIRST TRUST GLOBAL, you can compare the effects of market volatilities on Petroleo Brasileiro and FIRST TRUST 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 FIRST TRUST. Check out your portfolio center. Please also check ongoing floating volatility patterns of Petroleo Brasileiro and FIRST TRUST.
Diversification Opportunities for Petroleo Brasileiro and FIRST TRUST
-0.28 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Petroleo and FIRST is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding Petroleo Brasileiro Petrobras and FIRST TRUST GLOBAL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FIRST TRUST GLOBAL 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 FIRST TRUST. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FIRST TRUST GLOBAL has no effect on the direction of Petroleo Brasileiro i.e., Petroleo Brasileiro and FIRST TRUST go up and down completely randomly.
Pair Corralation between Petroleo Brasileiro and FIRST TRUST
Considering the 90-day investment horizon Petroleo Brasileiro is expected to generate 94.19 times less return on investment than FIRST TRUST. But when comparing it to its historical volatility, Petroleo Brasileiro Petrobras is 56.71 times less risky than FIRST TRUST. It trades about 0.07 of its potential returns per unit of risk. FIRST TRUST GLOBAL is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 2,708 in FIRST TRUST GLOBAL on September 20, 2024 and sell it today you would earn a total of 244,042 from holding FIRST TRUST GLOBAL or generate 9011.89% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 55.65% |
| Values | Daily Returns |
Petroleo Brasileiro Petrobras vs. FIRST TRUST GLOBAL
Performance |
| Timeline |
| Petroleo Brasileiro |
| FIRST TRUST GLOBAL |
Petroleo Brasileiro and FIRST TRUST Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Petroleo Brasileiro and FIRST TRUST
The main advantage of trading using opposite Petroleo Brasileiro and FIRST TRUST positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Petroleo Brasileiro position performs unexpectedly, FIRST TRUST 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 FIRST TRUST will offset losses from the drop in FIRST TRUST'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 |
| FIRST TRUST vs. Edinburgh Worldwide Investment | FIRST TRUST vs. BlackRock Latin American | FIRST TRUST vs. Coor Service Management | FIRST TRUST vs. Franklin FTSE Brazil |
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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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