Correlation Between Petroleo Brasileiro and Novartis
Can any of the company-specific risk be diversified away by investing in both Petroleo Brasileiro and Novartis 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 Novartis 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 Novartis AG, you can compare the effects of market volatilities on Petroleo Brasileiro and Novartis 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 Novartis. Check out your portfolio center. Please also check ongoing floating volatility patterns of Petroleo Brasileiro and Novartis.
Diversification Opportunities for Petroleo Brasileiro and Novartis
-0.3 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Petroleo and Novartis is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding Petroleo Brasileiro Petrobras and Novartis AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Novartis AG 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 Novartis. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Novartis AG has no effect on the direction of Petroleo Brasileiro i.e., Petroleo Brasileiro and Novartis go up and down completely randomly.
Pair Corralation between Petroleo Brasileiro and Novartis
Considering the 90-day investment horizon Petroleo Brasileiro Petrobras is expected to generate 1.62 times more return on investment than Novartis. However, Petroleo Brasileiro is 1.62 times more volatile than Novartis AG. It trades about -0.13 of its potential returns per unit of risk. Novartis AG is currently generating about -0.24 per unit of risk. If you would invest 1,368 in Petroleo Brasileiro Petrobras on September 20, 2024 and sell it today you would lose (84.00) from holding Petroleo Brasileiro Petrobras or give up 6.14% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Petroleo Brasileiro Petrobras vs. Novartis AG
Performance |
| Timeline |
| Petroleo Brasileiro |
| Novartis AG |
Petroleo Brasileiro and Novartis Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Petroleo Brasileiro and Novartis
The main advantage of trading using opposite Petroleo Brasileiro and Novartis positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Petroleo Brasileiro position performs unexpectedly, Novartis 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 Novartis will offset losses from the drop in Novartis' 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 |
| Novartis vs. The Bank of | Novartis vs. UnitedHealth Group Incorporated | Novartis vs. Grupo Sports World | Novartis vs. Martin Marietta Materials |
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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.
Other Complementary Tools
| Latest Portfolios Quick portfolio dashboard that showcases your latest portfolios | |
| Equity Valuation Check real value of public entities based on technical and fundamental data | |
| Positions Ratings Determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Global Markets Map Get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes | |
| CEOs Directory Screen CEOs from public companies around the world |