Correlation Between Petroleo Brasileiro and Pine Cliff
Can any of the company-specific risk be diversified away by investing in both Petroleo Brasileiro and Pine Cliff 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 Pine Cliff 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 Pine Cliff Energy, you can compare the effects of market volatilities on Petroleo Brasileiro and Pine Cliff 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 Pine Cliff. Check out your portfolio center. Please also check ongoing floating volatility patterns of Petroleo Brasileiro and Pine Cliff.
Diversification Opportunities for Petroleo Brasileiro and Pine Cliff
0.59 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Petroleo and Pine is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Petroleo Brasileiro Petrobras and Pine Cliff Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pine Cliff Energy 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 Pine Cliff. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pine Cliff Energy has no effect on the direction of Petroleo Brasileiro i.e., Petroleo Brasileiro and Pine Cliff go up and down completely randomly.
Pair Corralation between Petroleo Brasileiro and Pine Cliff
Considering the 90-day investment horizon Petroleo Brasileiro Petrobras is expected to generate 0.46 times more return on investment than Pine Cliff. However, Petroleo Brasileiro Petrobras is 2.16 times less risky than Pine Cliff. It trades about 0.0 of its potential returns per unit of risk. Pine Cliff Energy is currently generating about -0.09 per unit of risk. If you would invest 1,441 in Petroleo Brasileiro Petrobras on August 30, 2024 and sell it today you would lose (5.00) from holding Petroleo Brasileiro Petrobras or give up 0.35% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Petroleo Brasileiro Petrobras vs. Pine Cliff Energy
Performance |
| Timeline |
| Petroleo Brasileiro |
| Pine Cliff Energy |
Petroleo Brasileiro and Pine Cliff Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Petroleo Brasileiro and Pine Cliff
The main advantage of trading using opposite Petroleo Brasileiro and Pine Cliff positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Petroleo Brasileiro position performs unexpectedly, Pine Cliff 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 Pine Cliff will offset losses from the drop in Pine Cliff'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 |
| Pine Cliff vs. Athabasca Oil Corp | Pine Cliff vs. Cardinal Energy | Pine Cliff vs. Tamarack Valley Energy | Pine Cliff vs. Saturn Oil Gas |
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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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