Correlation Between Petroleo Brasileiro and Whitecap Resources
Can any of the company-specific risk be diversified away by investing in both Petroleo Brasileiro and Whitecap Resources 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 Whitecap Resources 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 Whitecap Resources, you can compare the effects of market volatilities on Petroleo Brasileiro and Whitecap Resources 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 Whitecap Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Petroleo Brasileiro and Whitecap Resources.
Diversification Opportunities for Petroleo Brasileiro and Whitecap Resources
0.19 | Correlation Coefficient |
Average diversification
The 3 months correlation between Petroleo and Whitecap is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding Petroleo Brasileiro Petrobras and Whitecap Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Whitecap Resources 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 Whitecap Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Whitecap Resources has no effect on the direction of Petroleo Brasileiro i.e., Petroleo Brasileiro and Whitecap Resources go up and down completely randomly.
Pair Corralation between Petroleo Brasileiro and Whitecap Resources
Considering the 90-day investment horizon Petroleo Brasileiro Petrobras is expected to under-perform the Whitecap Resources. In addition to that, Petroleo Brasileiro is 1.2 times more volatile than Whitecap Resources. It trades about -0.02 of its total potential returns per unit of risk. Whitecap Resources is currently generating about 0.05 per unit of volatility. If you would invest 663.00 in Whitecap Resources on August 25, 2024 and sell it today you would earn a total of 103.00 from holding Whitecap Resources or generate 15.54% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Petroleo Brasileiro Petrobras vs. Whitecap Resources
Performance |
| Timeline |
| Petroleo Brasileiro |
| Whitecap Resources |
Petroleo Brasileiro and Whitecap Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Petroleo Brasileiro and Whitecap Resources
The main advantage of trading using opposite Petroleo Brasileiro and Whitecap Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Petroleo Brasileiro position performs unexpectedly, Whitecap Resources 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 Whitecap Resources will offset losses from the drop in Whitecap Resources' long position.| Petroleo Brasileiro vs. Shell PLC ADR | Petroleo Brasileiro vs. Suncor Energy | Petroleo Brasileiro vs. Cenovus Energy | Petroleo Brasileiro vs. Petrleo Brasileiro SA |
| Whitecap Resources vs. Petroleo Brasileiro Petrobras | Whitecap Resources vs. Equinor ASA ADR | Whitecap Resources vs. Eni SpA ADR | Whitecap Resources 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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