Correlation Between Petroleo Brasileiro and American Beacon
Can any of the company-specific risk be diversified away by investing in both Petroleo Brasileiro and American Beacon 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 American Beacon 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 American Beacon Shapiro, you can compare the effects of market volatilities on Petroleo Brasileiro and American Beacon 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 American Beacon. Check out your portfolio center. Please also check ongoing floating volatility patterns of Petroleo Brasileiro and American Beacon.
Diversification Opportunities for Petroleo Brasileiro and American Beacon
-0.1 | Correlation Coefficient |
Good diversification
The 3 months correlation between Petroleo and American is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding Petroleo Brasileiro Petrobras and American Beacon Shapiro in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Beacon Shapiro 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 American Beacon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Beacon Shapiro has no effect on the direction of Petroleo Brasileiro i.e., Petroleo Brasileiro and American Beacon go up and down completely randomly.
Pair Corralation between Petroleo Brasileiro and American Beacon
Considering the 90-day investment horizon Petroleo Brasileiro Petrobras is expected to under-perform the American Beacon. In addition to that, Petroleo Brasileiro is 2.0 times more volatile than American Beacon Shapiro. It trades about -0.02 of its total potential returns per unit of risk. American Beacon Shapiro is currently generating about 0.0 per unit of volatility. If you would invest 1,470 in American Beacon Shapiro on September 13, 2024 and sell it today you would lose (1.00) from holding American Beacon Shapiro or give up 0.07% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 97.67% |
| Values | Daily Returns |
Petroleo Brasileiro Petrobras vs. American Beacon Shapiro
Performance |
| Timeline |
| Petroleo Brasileiro |
| American Beacon Shapiro |
Petroleo Brasileiro and American Beacon Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Petroleo Brasileiro and American Beacon
The main advantage of trading using opposite Petroleo Brasileiro and American Beacon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Petroleo Brasileiro position performs unexpectedly, American Beacon 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 American Beacon will offset losses from the drop in American Beacon's long position.| Petroleo Brasileiro vs. Aquagold International | Petroleo Brasileiro vs. Thrivent High Yield | Petroleo Brasileiro vs. Morningstar Unconstrained Allocation | Petroleo Brasileiro vs. Via Renewables |
| American Beacon vs. American Beacon Ssi | American Beacon vs. American Beacon Bridgeway | American Beacon vs. American Beacon Bridgeway | American Beacon vs. American Beacon Twentyfour |
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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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