Correlation Between Petroleo Brasileiro and Sextant Bond
Can any of the company-specific risk be diversified away by investing in both Petroleo Brasileiro and Sextant Bond 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 Sextant Bond 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 Sextant Bond Income, you can compare the effects of market volatilities on Petroleo Brasileiro and Sextant Bond 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 Sextant Bond. Check out your portfolio center. Please also check ongoing floating volatility patterns of Petroleo Brasileiro and Sextant Bond.
Diversification Opportunities for Petroleo Brasileiro and Sextant Bond
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Petroleo and Sextant is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Petroleo Brasileiro Petrobras and Sextant Bond Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sextant Bond Income 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 Sextant Bond. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sextant Bond Income has no effect on the direction of Petroleo Brasileiro i.e., Petroleo Brasileiro and Sextant Bond go up and down completely randomly.
Pair Corralation between Petroleo Brasileiro and Sextant Bond
Considering the 90-day investment horizon Petroleo Brasileiro Petrobras is expected to generate 4.62 times more return on investment than Sextant Bond. However, Petroleo Brasileiro is 4.62 times more volatile than Sextant Bond Income. It trades about 0.01 of its potential returns per unit of risk. Sextant Bond Income is currently generating about 0.02 per unit of risk. If you would invest 1,387 in Petroleo Brasileiro Petrobras on September 14, 2024 and sell it today you would lose (26.00) from holding Petroleo Brasileiro Petrobras or give up 1.87% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Petroleo Brasileiro Petrobras vs. Sextant Bond Income
Performance |
| Timeline |
| Petroleo Brasileiro |
| Sextant Bond Income |
Petroleo Brasileiro and Sextant Bond Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Petroleo Brasileiro and Sextant Bond
The main advantage of trading using opposite Petroleo Brasileiro and Sextant Bond positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Petroleo Brasileiro position performs unexpectedly, Sextant Bond 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 Sextant Bond will offset losses from the drop in Sextant Bond'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 |
| Sextant Bond vs. Sextant Growth Fund | Sextant Bond vs. Sextant International Fund | Sextant Bond vs. Sextant Short Term Bond | Sextant Bond vs. Sextant E Fund |
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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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