Correlation Between Petroleo Brasileiro and Petróleo Brasileiro
Can any of the company-specific risk be diversified away by investing in both Petroleo Brasileiro and Petróleo Brasileiro 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 Petróleo Brasileiro 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 Petrleo Brasileiro SA, you can compare the effects of market volatilities on Petroleo Brasileiro and Petróleo Brasileiro 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 Petróleo Brasileiro. Check out your portfolio center. Please also check ongoing floating volatility patterns of Petroleo Brasileiro and Petróleo Brasileiro.
Diversification Opportunities for Petroleo Brasileiro and Petróleo Brasileiro
0.98 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Petroleo and Petróleo is 0.98. Overlapping area represents the amount of risk that can be diversified away by holding Petroleo Brasileiro Petrobras and Petrleo Brasileiro SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Petróleo Brasileiro 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 Petróleo Brasileiro. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Petróleo Brasileiro has no effect on the direction of Petroleo Brasileiro i.e., Petroleo Brasileiro and Petróleo Brasileiro go up and down completely randomly.
Pair Corralation between Petroleo Brasileiro and Petróleo Brasileiro
Considering the 90-day investment horizon Petroleo Brasileiro Petrobras is expected to generate 1.02 times more return on investment than Petróleo Brasileiro. However, Petroleo Brasileiro is 1.02 times more volatile than Petrleo Brasileiro SA. It trades about -0.05 of its potential returns per unit of risk. Petrleo Brasileiro SA is currently generating about -0.05 per unit of risk. If you would invest 1,560 in Petroleo Brasileiro Petrobras on August 28, 2024 and sell it today you would lose (81.00) from holding Petroleo Brasileiro Petrobras or give up 5.19% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Petroleo Brasileiro Petrobras vs. Petrleo Brasileiro SA
Performance |
| Timeline |
| Petroleo Brasileiro |
| Petróleo Brasileiro |
Petroleo Brasileiro and Petróleo Brasileiro Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Petroleo Brasileiro and Petróleo Brasileiro
The main advantage of trading using opposite Petroleo Brasileiro and Petróleo Brasileiro positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Petroleo Brasileiro position performs unexpectedly, Petróleo Brasileiro 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 Petróleo Brasileiro will offset losses from the drop in Petróleo Brasileiro's long position.The idea behind Petroleo Brasileiro Petrobras and Petrleo Brasileiro SA pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Petróleo Brasileiro vs. Petroleo Brasileiro Petrobras | Petróleo Brasileiro vs. Equinor ASA ADR | Petróleo Brasileiro vs. Eni SpA ADR | Petróleo Brasileiro 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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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