Correlation Between Petroleo Brasileiro and NEW WORLD
Can any of the company-specific risk be diversified away by investing in both Petroleo Brasileiro and NEW WORLD 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 NEW WORLD 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 NEW WORLD DEVCO, you can compare the effects of market volatilities on Petroleo Brasileiro and NEW WORLD 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 NEW WORLD. Check out your portfolio center. Please also check ongoing floating volatility patterns of Petroleo Brasileiro and NEW WORLD.
Diversification Opportunities for Petroleo Brasileiro and NEW WORLD
0.36 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Petroleo and NEW is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Petroleo Brasileiro Petrobras and NEW WORLD DEVCO in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NEW WORLD DEVCO 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 NEW WORLD. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NEW WORLD DEVCO has no effect on the direction of Petroleo Brasileiro i.e., Petroleo Brasileiro and NEW WORLD go up and down completely randomly.
Pair Corralation between Petroleo Brasileiro and NEW WORLD
Considering the 90-day investment horizon Petroleo Brasileiro Petrobras is expected to generate 0.61 times more return on investment than NEW WORLD. However, Petroleo Brasileiro Petrobras is 1.63 times less risky than NEW WORLD. It trades about 0.08 of its potential returns per unit of risk. NEW WORLD DEVCO is currently generating about -0.04 per unit of risk. If you would invest 642.00 in Petroleo Brasileiro Petrobras on September 24, 2024 and sell it today you would earn a total of 642.50 from holding Petroleo Brasileiro Petrobras or generate 100.08% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 98.42% |
| Values | Daily Returns |
Petroleo Brasileiro Petrobras vs. NEW WORLD DEVCO
Performance |
| Timeline |
| Petroleo Brasileiro |
| NEW WORLD DEVCO |
Petroleo Brasileiro and NEW WORLD Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Petroleo Brasileiro and NEW WORLD
The main advantage of trading using opposite Petroleo Brasileiro and NEW WORLD positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Petroleo Brasileiro position performs unexpectedly, NEW WORLD 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 NEW WORLD will offset losses from the drop in NEW WORLD'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 |
| NEW WORLD vs. OPEN HOUSE GROUP | NEW WORLD vs. AEON MALL LTD | NEW WORLD vs. Hufvudstaden AB | NEW WORLD vs. FRASERS PROPERTY |
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 Stocks Directory module to find actively traded stocks across global markets.
Other Complementary Tools
| Economic Indicators Top statistical indicators that provide insights into how an economy is performing | |
| Bonds Directory Find actively traded corporate debentures issued by US companies | |
| Bond Analysis Evaluate and analyze corporate bonds as a potential investment for your portfolios. | |
| Correlation Analysis Reduce portfolio risk simply by holding instruments which are not perfectly correlated | |
| Aroon Oscillator Analyze current equity momentum using Aroon Oscillator and other momentum ratios |