Correlation Between Petroleo Brasileiro and VanEck Oil
Can any of the company-specific risk be diversified away by investing in both Petroleo Brasileiro and VanEck Oil 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 VanEck Oil 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 VanEck Oil Services, you can compare the effects of market volatilities on Petroleo Brasileiro and VanEck Oil 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 VanEck Oil. Check out your portfolio center. Please also check ongoing floating volatility patterns of Petroleo Brasileiro and VanEck Oil.
Diversification Opportunities for Petroleo Brasileiro and VanEck Oil
0.02 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Petroleo and VanEck is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding Petroleo Brasileiro Petrobras and VanEck Oil Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VanEck Oil Services 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 VanEck Oil. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VanEck Oil Services has no effect on the direction of Petroleo Brasileiro i.e., Petroleo Brasileiro and VanEck Oil go up and down completely randomly.
Pair Corralation between Petroleo Brasileiro and VanEck Oil
Considering the 90-day investment horizon Petroleo Brasileiro Petrobras is expected to generate 1.45 times more return on investment than VanEck Oil. However, Petroleo Brasileiro is 1.45 times more volatile than VanEck Oil Services. It trades about 0.07 of its potential returns per unit of risk. VanEck Oil Services is currently generating about 0.02 per unit of risk. If you would invest 762.00 in Petroleo Brasileiro Petrobras on September 14, 2024 and sell it today you would earn a total of 599.00 from holding Petroleo Brasileiro Petrobras or generate 78.61% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 76.36% |
| Values | Daily Returns |
Petroleo Brasileiro Petrobras vs. VanEck Oil Services
Performance |
| Timeline |
| Petroleo Brasileiro |
| VanEck Oil Services |
Petroleo Brasileiro and VanEck Oil Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Petroleo Brasileiro and VanEck Oil
The main advantage of trading using opposite Petroleo Brasileiro and VanEck Oil positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Petroleo Brasileiro position performs unexpectedly, VanEck Oil 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 VanEck Oil will offset losses from the drop in VanEck Oil'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 |
| VanEck Oil vs. UBSFund Solutions MSCI | VanEck Oil vs. Vanguard SP 500 | VanEck Oil vs. iShares VII PLC | VanEck Oil vs. iShares Core SP |
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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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